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an SEC investigation or the grand jury subpoena related to any alleged misstatements

of the Auditor Defendant made during the purported class period. The announcement

of the SEC investigation focused on what the Company was telling its students in its

seminars and classes – not what the Company was telling the investing public about

Whitney’s financial condition. Further, announcement of the SEC investigation focused

on whether the information that Whitney was providing to its students complied with

federal securities laws – it did not focus on whether Whitney, in its SEC reports, was in

compliance with the federal securities laws. The matters announced in the SEC

investigation and grand jury subpoena have nothing to do with Plaintiffs’ claims that they

were deceived into buying Whitney’s common stock based on false or misleading

financial information in the financial statements audited by the Auditor Defendant.

There are no specific factual allegations that the Auditor Defendant was reckless, or

even negligent, in auditing Whitney’s financial statements. Thus, the November and

December 2006 press releases do not reveal any fraud as alleged to have been

perpetrated by the Auditor Defendant. There is simply no connection between the

alleged fraud, acts by the Auditor Defendant, and plaintiff’s loss.

IV. In Sum

Plaintiff has not plead a securities fraud case. The CAC centers on three

theories of fraud which plaintiff says were revealed with the issuance of two press

releases, neither of which admit any wrongdoing. The substance of the press releases

do not mention, much less relate, to any of plaintiff’s theories of securities fraud.

Moreover, the CAC fails to contain allegations to show that any of the defendants acted

with scienter. When the press releases issued, given the particular volatility of the


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