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As discussed, and for the reasons provided by the Court, counsel for Defendant Barry Honig is to file correspondence by December 20, 2023, indicating whether Mr. Honig intends to further pursue his argument that sanctions are warranted for abusive litigation pursuant to the PSLRA. So Ordered by Judge Georgette Castner on 12/13/23. (adi) (Entered: 12/13/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/380986552/","id":380986552,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/388774561/","id":388774561,"tags":[],"absolute_url":"/docket/6313843/261/takata-v-riot-blockchain-inc/","date_created":"2024-03-13T07:38:15.238085-07:00","date_modified":"2026-06-16T08:51:15.604890-07:00","sha1":"88d749ce47e77e854fe1ac0fd6bfc913dc8174c7","page_count":3,"file_size":449430,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.261.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.261.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 261 Filed 03/13/24 Page 1 of 3 PageID:\n 10469\n\n\n\n UNITED STATES DISTRICT COURT\n DISTRICT OF NEW JERSEY\n\nCREIGHTON TAKATA, :\n : Civil Action No.: 18-2293(GC)(RLS)\n Plaintiff, :\n :\n v. : JOINT STIPULATION OF\n : VOLUNTARY DISMISSAL OF\nRIOT BLOCKCHAIN, INC., et al. : CLAIMS\n :\n Defendants. :\n :\n\n Lead Plaintiff Dr. Stanley Golovac (\u201cPlaintiff\u201d) and Defendant Barry Honig\n\n(\u201cDefendant Honig\u201d), by and through their respective attorneys, jointly state as\n\nfollows:\n\n WHEREAS, Plaintiff filed a Consolidated Third Amended Class Action\n\nComplaint on May 27, 2022 (ECF No. 231);\n\n WHEREAS, Defendant Honig filed a motion to dismiss the Consolidated\n\nThird Amended Class Action Complaint on July 18, 2022 (ECF No. 234);\n\n WHEREAS, Judge Georgette Castner dismissed the Consolidated Third\n\nAmended Class Action Complaint in an Opinion (ECF No. 251) and Order (ECF\n\nNo. 252) dated August 25, 2023, in which it was ordered that Plaintiff\u2019s claims were\n\ndismissed with prejudice.\n\n THEREFORE, IT IS HEREBY STIPULATED, by and between the\n\nundersigned parties, that:\n\n\n 1\n\f Case 3:18-cv-02293-GC-RLS Document 261 Filed 03/13/24 Page 2 of 3 PageID:\n 10470\n\n\n\n 1. Pursuant to Rule 41(a)(1)(A)(ii), Plaintiff dismisses all claims in their entirety\n\n against Defendant Honig with prejudice;\n\n 2. Plaintiff hereby agrees to waive all rights to file an amended complaint and to\n\n appeal any order entered in favor of Defendant Honig; and\n\n 3. Each of Plaintiff and Defendant Honig shall bear his own attorneys\u2019 fees and\n\n costs incurred in connection with this action.\n\n\n\n Dated: March 11, 2024 SHEPPARD MULLIN RICHTER &\n HAMPTON LLP\n\nSO ORDERED /s/ Tyler E. Baker\nOn this 13th day of March, 2024 Tyler E. Baker (New Jersey Bar No. 44392011)\n Christopher J. Bosch (Admitted pro hac vice)\n_________________________ 30 Rockefeller Plaza, 39th Floor\nHon. Georgette Castner, U.S.D.J. New York, NY 10112-0015\n Telephone: (212) 653-8700\n tbaker@sheppardmullin.com\n cbosch@sheppardmullin.com\n\n Robert D. Weber (Admitted pro hac vice)\n 1901 Avenue of the Stars, Suite 1600\n Los Angeles, CA 90067\n Telephone: (310) 227-3746\n Facsimile: (310) 228-3962\n rweber@sheppardmullin.com\n\n Counsel for Defendant Barry Honig\n\n\n\n\n 2\n\fCase 3:18-cv-02293-GC-RLS Document 261 Filed 03/13/24 Page 3 of 3 PageID:\n 10471\n\n\n\n LITE DEPALMA GREENBERG\n & AFANADOR, LLC\n\n /s/ Joseph J. DePalma\n Joseph J. DePalma\n 570 Broad Street, Suite 1201\n Newark, NJ 07102\n Telephone: (973) 623-3000\n Facsimile: (973) 623-0858\n jdepalma@litedepalma.com\n\n MOTLEY RICE LLC\n William S. Norton (Admitted pro hac vice)\n Joshua C. Littlejohn (Admitted pro hac vice)\n Christopher C. Moriarty(Admitted pro hac vice)\n 28 Bridgeside Boulevard\n Mt. 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Abel\n 5335 Wisconsin Ave. NW, Ste. 440\n Washington, D.C. 20015\n Telephone: (202) 274-0237\n Facsimile: (202) 686-2877\n dabel@usmarketlaw.com\n\n\n Counsel for Lead Plaintiff Dr. Stanley Golovac\n\n\n\n\n 3\n\f","ocr_status":2,"date_upload":"2025-01-24T07:06:55.045570-08:00","document_number":"261","attachment_number":null,"pacer_doc_id":"119021024118","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Stipulation and Order","acms_document_guid":""}],"date_created":"2024-03-13T07:38:15.219890-07:00","date_modified":"2026-06-16T08:51:15.580631-07:00","date_filed":"2024-03-13","time_filed":"10:26:15","entry_number":261,"recap_sequence_number":"2024-03-13.001","pacer_sequence_number":935,"description":"STIPULATION AND ORDER of Voluntary Dismissal as to BARRY HONIG. Signed by Judge Georgette Castner on 3/13/2024. 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Pursuant to Rule 41(a)(1)(A)(ii), Plaintiff dismisses all claims in their entirety\n\n against Defendant Honig with prejudice;\n\n2. Plaintiff hereby agrees to waive all rights to file an amended complaint and to\n\n appeal any order entered in favor of Defendant Honig; and\n\n3. Each of Plaintiff and Defendant Honig shall bear his own attorneys\u2019 fees and\n\n costs incurred in connection with this action.\n\n\n\n Dated: March 11, 2024 SHEPPARD MULLIN RICHTER &\n HAMPTON LLP\n\n /s/ Tyler E. Baker\n Tyler E. Baker (New Jersey Bar No. 44392011)\n Christopher J. Bosch (Admitted pro hac vice)\n 30 Rockefeller Plaza, 39th Floor\n New York, NY 10112-0015\n Telephone: (212) 653-8700\n tbaker@sheppardmullin.com\n cbosch@sheppardmullin.com\n\n Robert D. Weber (Admitted pro hac vice)\n 1901 Avenue of the Stars, Suite 1600\n Los Angeles, CA 90067\n Telephone: (310) 227-3746\n Facsimile: (310) 228-3962\n rweber@sheppardmullin.com\n\n Counsel for Defendant Barry Honig\n\n\n\n\n 2\n\fCase 3:18-cv-02293-GC-RLS Document 260 Filed 03/11/24 Page 3 of 3 PageID:\n 10468\n\n\n\n LITE DEPALMA GREENBERG\n & AFANADOR, LLC\n\n /s/ Joseph J. DePalma\n Joseph J. DePalma\n 570 Broad Street, Suite 1201\n Newark, NJ 07102\n Telephone: (973) 623-3000\n Facsimile: (973) 623-0858\n jdepalma@litedepalma.com\n\n MOTLEY RICE LLC\n William S. Norton (Admitted pro hac vice)\n Joshua C. Littlejohn (Admitted pro hac vice)\n Christopher C. Moriarty(Admitted pro hac vice)\n 28 Bridgeside Boulevard\n Mt. Pleasant, SC 29464\n Telephone: (843) 216-9000\n Facsimile: (843) 216-9450\n bnorton@motleyrice.com\n jlittlejohn@motleyrice.com\n cmoriarty@motleyrice.com\n\n Counsel for Lead Plaintiff Dr. Stanley Golovac\n and Lead Counsel for the Class\n\n US MARKET ADVISORS LAW GROUP PLLC\n David P. Abel\n 5335 Wisconsin Ave. NW, Ste. 440\n Washington, D.C. 20015\n Telephone: (202) 274-0237\n Facsimile: (202) 686-2877\n dabel@usmarketlaw.com\n\n\n Counsel for Lead Plaintiff Dr. Stanley Golovac\n\n\n\n\n 3\n\f","ocr_status":2,"date_upload":"2025-01-24T07:07:06.919185-08:00","document_number":"260","attachment_number":null,"pacer_doc_id":"119021014475","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Stipulation of Dismissal (aty)","acms_document_guid":""}],"date_created":"2024-03-11T13:05:47.537205-07:00","date_modified":"2026-06-16T08:51:15.527984-07:00","date_filed":"2024-03-11","time_filed":"15:39:00","entry_number":260,"recap_sequence_number":"2024-03-11.001","pacer_sequence_number":933,"description":"STIPULATION of Dismissal of Claims (Joint) by Dr. Stanley Golovac. (DEPALMA, JOSEPH) (Entered: 03/11/2024)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/373711255/","id":373711255,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/381268707/","id":381268707,"tags":[],"absolute_url":"/docket/6313843/259/takata-v-riot-blockchain-inc/","date_created":"2023-12-19T15:01:12.129458-08:00","date_modified":"2026-06-16T08:51:15.495237-07:00","sha1":"34762c6cacb880a3a0171fe4d973eb7b2dfcef25","page_count":1,"file_size":143842,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.259.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.259.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 259 Filed 12/19/23 Page 1 of 1 PageID:\n 10465\n Sheppard, Mullin, Richter & Hampton LLP\n 30 Rockefeller Plaza\n New York, New York 10112-0015\n 212.653.8700 main\n 212.653.8701 fax\n www.sheppardmullin.com\n\n\n\n 212.634.3048 direct\n tbaker@sheppardmullin.com\nDecember 19, 2023\n\n\nVIA ELECTRONIC FILING\n\nHonorable Georgette Castner\nU.S. District Court, District of New Jersey\nClarkson S. Fisher Federal Building & U.S.\nCourthouse\n402 East State Street\nTrenton, NJ 08608\n\nRe: Takata v. Riot Blockchain, Inc., et al., Civil Action No. 18-2293 (GC) (RLS)\n\n\nDear Judge Castner:\n\nWe write in follow-up to our December 13, 2023 telephonic status conference with you. Our\nclient, defendant Barry Honig, has elected not to proceed with the filing of a motion for sanctions\nor application for fees. We have notified Plaintiffs\u2019 counsel and indicated that Mr. Honig will sign\non to the same stipulation of dismissal entered into by the other parties (Dkt. 254), which we\nexpect will be filed shortly.\n\nVery truly yours,\n\n/s/ Tyler E. Baker\n\nTyler E. Baker\nfor SHEPPARD, MULLIN, RICHTER & HAMPTON LLP\n\n\ncc: All Counsel (via ECF)\n\f","ocr_status":2,"date_upload":"2025-01-24T07:07:19.776334-08:00","document_number":"259","attachment_number":null,"pacer_doc_id":"119020727484","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2023-12-19T15:01:12.096463-08:00","date_modified":"2026-06-16T08:51:15.470778-07:00","date_filed":"2023-12-19","time_filed":"17:56:57","entry_number":259,"recap_sequence_number":"2023-12-19.001","pacer_sequence_number":931,"description":"Letter from Tyler Baker. 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WILSON\n\n\nTITLE OF CASE: CV18-2293(GC)(RLS)\nTAKATA\nv.\nRIOT BLOCKCHAIN, INC. et al.\n\n\nAPPEARANCES:\nBruce Greenberg, Esq., Joshua Littlejohn, Esq. & William Norton, Esq., for Plaintiff.\nRobert Weber, Esq. & Christopher Bosch, Esq., for Defendants.\n\n\nNATURE OF PROCEEDINGS:\nTELEPHONE STATUS CONFERENCE HELD.\nOrdered that Mr. Honig\u2019s counsel is to report back to the court within 7 days on the issue\nregarding sanctions.\n\n\nTIME COMMENCED: 11:00 a.m.\nTIME ADJOURNED: 11:12 a.m.\nTOTAL TIME: 12 minutes\n\n\n s/Ann Dello Iacono\n Deputy Clerk\n\f","ocr_status":2,"date_upload":"2025-01-24T07:07:33.991497-08:00","document_number":"257","attachment_number":null,"pacer_doc_id":"119020706216","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Telephone Conference","acms_document_guid":""}],"date_created":"2023-12-13T10:04:22.453012-08:00","date_modified":"2026-06-16T08:51:15.373325-07:00","date_filed":"2023-12-13","time_filed":"12:52:28","entry_number":257,"recap_sequence_number":"2023-12-13.001","pacer_sequence_number":927,"description":"Minute Entry for proceedings held before Judge Georgette Castner: Telephone Status Conference held on 12/13/2023. (Court Reporter, Kimberly Wilson (609-815-2751)) (adi) (Entered: 12/13/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/373130592/","id":373130592,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/380678482/","id":380678482,"tags":[],"absolute_url":"","date_created":"2023-12-13T10:04:21.856989-08:00","date_modified":"2023-12-13T10:04:21.864980-08:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order","acms_document_guid":""}],"date_created":"2023-12-13T10:04:21.831594-08:00","date_modified":"2023-12-13T10:04:21.831609-08:00","date_filed":"2023-12-13","time_filed":"12:54:28","entry_number":null,"recap_sequence_number":"2023-12-13.001","pacer_sequence_number":null,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/372401235/","id":372401235,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/379932844/","id":379932844,"tags":[],"absolute_url":"","date_created":"2023-12-05T11:05:30.394791-08:00","date_modified":"2026-06-16T08:51:15.342611-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Set/Reset Hearings","acms_document_guid":""}],"date_created":"2023-12-05T11:05:30.386441-08:00","date_modified":"2026-06-16T08:51:15.309637-07:00","date_filed":"2023-12-05","time_filed":"13:46:27","entry_number":null,"recap_sequence_number":"2023-12-05.001","pacer_sequence_number":null,"description":"Set/Reset Hearings: Telephone Status Conference set for 12/13/2023 at 11:00 AM before Judge Georgette Castner. The dial in information has been sent to the parties. (adi)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/371873330/","id":371873330,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/379367058/","id":379367058,"tags":[],"absolute_url":"/docket/6313843/256/takata-v-riot-blockchain-inc/","date_created":"2023-11-29T14:07:24.102313-08:00","date_modified":"2026-06-16T08:51:15.283529-07:00","sha1":"ff8126ca8e59501342f7e8ab3acd542c7f2259e0","page_count":2,"file_size":70851,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.256.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.256.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cvy-02293-GC-RLS Document 256 Filed 11/29/23. Page 1 of 2 PagelD:\n\nUNITED STATES DISTRICT COURT\n\nDISTRICT OF NEW JERSEY\nCREIGHTON TAKATA,\nCivil Action No.: 18-2293-GC-RLS\nPlaintiff, : JOINT STIPULATION OF\n: VOLUNTARY DISMISSAL OF\nVv. : CLAIMS\n\nRIOT BLOCKCHAIN, INC., et al.\n\nDefendants.\n\nLead Plaintiff Dr, Stanley Golovac (\u2018Plaintiff\u2019) and Defendants Riot\n\u2018Blockchain, Inc., John O\u2019Rourke, Eric So, Jason Les, Mike Dai, Andrew Kaplan,\nJeffrey G. McGonegal, and Michael Beeghley (collectively, \u201cRiot Defendants\u201d), by\nand through their respective attorneys, jointly state as follows:\n\nWHEREAS, Plaintiff filed a Consolidated Third Amended Class Action\nComplaint on May 27, 2022 (ECF No. 231);\n\nWHEREAS, Defendants filed motions to dismiss the Consolidated Third\nAmended Class Action Complaint on July 18, 2022 (ECF Nos. 232, 233, 234);\n\nWHEREAS, Judge Georgette Castner dismissed the Consolidated Third\nAmended Class Action Complaint in an Opinion (ECF No. 251) and Order (ECF\nNo, 252) dated August 25, 2023, in which it was ordered that Plaintiffs claims were\n\ndismissed with prejudice.\n\n\fCase 3:18-cv-02293-GC-RLS Document 256 Filed 11/29/23 Page 2 of 2 PagelD:\n10463 - ste\n\nTHEREFORE, IT IS HEREBY STIPULATED, by and between the\nundersigned parties, that:\n1, Pursuant to Rule 41(a)(1)(A)Gi), Plaintiff dismisses all claims in their entirety\nagainst the Riot Defendants with prejudice;\n2. Plaintiff hereby agrees to waive all rights to file an amended complaint and to\nappeal any order entered in favor of the Riot Defendants; and\n3, Each of Plaintiff and the Riot Defendants shall bear his, her, or its own\nattorneys\u2019 fees and costs incurred in connection with this action.\nDated: November 28, 2023 PAUL HASTINGS LLP\n/s/_ Chad J, Peterman\nChad J. Peterman\n200 Park Avenue\nNew York, NY 10166\nTelephone: (212) 318-6797\n\nFacsimile: (212) 230-7797\nchadpeterman@paulhastings.com\n\nD, Scott Carlton (Admitted pro hae vice)\n515 South Flower Street, Twenty-Fifth Floor\nLos Angeles, CA 90071-2228\n\nTelephone: (213) 683-6000\n\nFacsimile: (213) 627-0705\nscottcarlton@paulhastings.com\n\nOe usALltG ote - HUESTON HENNIGAN LLP\nGeargett Castner, U.S.D.J. Thomas A Zaccaro (Admitted pro hac vice)\nNd 523 West 6th St., Suite 400\n\nLos Angeles, California CA 90014\nTelephone: (213) 788-4039\ntzaccaro@hueston,com\n\n","ocr_status":1,"date_upload":"2025-01-24T07:07:47.902396-08:00","document_number":"256","attachment_number":null,"pacer_doc_id":"119020661986","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Stipulation and Order","acms_document_guid":""}],"date_created":"2023-11-29T14:07:24.083857-08:00","date_modified":"2026-06-16T08:51:15.250636-07:00","date_filed":"2023-11-29","time_filed":"16:46:03","entry_number":256,"recap_sequence_number":"2023-11-29.001","pacer_sequence_number":922,"description":"JOINT STIPULATION AND ORDER of voluntary dismissal as to ANDREW KAPLAN, JASON LES, JEFFREY G. MCGONEGAL, JOHN O'ROURKE, RIOT BLOCKCHAIN, INC., ERIC SO, MICHAEL BEEGHLEY and MIKE DAI in their entirety against the Riot Defendants with prejudice. Each of Plaintiff and the Riot Defendants shall bear his, her, or its own attorneys' fees and costs incurred in connection with this action. Signed by Judge Georgette Castner on 11/29/2023. (kht) (Entered: 11/29/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/371749601/","id":371749601,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/379240938/","id":379240938,"tags":[],"absolute_url":"/docket/6313843/255/takata-v-riot-blockchain-inc/","date_created":"2023-11-28T14:03:47.188885-08:00","date_modified":"2026-06-16T08:51:15.226095-07:00","sha1":"315d75e01b9041f9fc216b0da31c30615c847344","page_count":2,"file_size":270078,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.255.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.255.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 255 Filed 11/28/23 Page 1 of 2 PageID:\n 10460\n\n\n\n\n November 28, 2023\n\n\n\nVIA ECF\nHonorable Georgette Castner, U.S.D.J.\nUnited States District Court, District of New Jersey\nClarkson S. Fisher Federal Building & United States Courthouse\n402 East State Street\nTrenton, NJ 08608\n\n Re: Takata v. Riot Blockchain, Inc., et al.\n Civil Action No. 3:18-cv-02293(GC)(RLS)\n\nDear Judge Castner:\n\n We write in response to yesterday\u2019s letter filed by counsel for Defendant Barry Honig\n(\u201cHonig Letter,\u201d ECF No. 253) in the above-referenced matter. To understand the letter\u2019s full\ncontext, some background is necessary.\n\n Following this Court\u2019s Opinion and Order dismissing this case with prejudice (ECF Nos.\n251-52), counsel for Plaintiff contacted counsel for Defendants offering to forego any appeal in\nthis matter if the parties each agreed to bear his or its own costs. A stipulation to that effect was\ncirculated, which would then be filed with the Court and would provide for the entry of a Final\nJudgment under Fed. R. Civ. P. 58. Counsel for every Defendant other than Mr. Honig agreed to\njoin in such a stipulation, as reflected in the Joint Stipulation of Voluntary Dismissal of Claims\nfiled today (ECF No. 254).\n\n In refusing to join the parties\u2019 Joint Stipulation, Mr. Honig takes the view that this Court\nhas not made what he terms as \u201crequired findings\u201d concerning Rule 11 under the Private Securities\nLitigation Reform Act (\u201cPSLRA\u201d), 15 U.S.C. \u00a7 78u-4(c)(1). However, in a securities action\ngoverned by the PSLRA, \u201cRule 11 sanctions do not inexorably follow from losing a case.\u201d Rabin\nv. Nasdaq Omx Phlx LLC, 2016 WL 3914031, at *2 (E.D. Pa. July 20, 2016) (denying motion for\nsanctions under 15 U.S.C. \u00a7 78u-4(c)(1)). \u201cCourts must only impose sanctions under Rule 11 \u2018in\nthe exceptional circumstance where a claim or motion is patently unmeritorious or frivolous.\u2019\u201d Id.\n(quoting Ario v. Underwriting Members of Syndicate 53 at Lloyds for 1998 Year of Account, 618\nF.3d 277, 297 (3d Cir. 2010)). And, it is well-settled that Rule 11 \u201cis meant to be applied\nsparingly.\u201d Ampro Computs., Inc. v. LXC, LLC, 2016 WL 3703129, at *3 (D. Del. July 8, 2016)\n(citation and internal quotation marks omitted).\n\fCase 3:18-cv-02293-GC-RLS Document 255 Filed 11/28/23 Page 2 of 2 PageID:\n 10461\n\n\n\n\nHonorable Georgette Castner, U.S.D.J.\nNovember 28, 2023\nPage 2\n\n Here, however, there has not been any hint of sanctionable conduct by Plaintiff or his\ncounsel. By entering into today\u2019s stipulation, all the other Defendants impliedly agree with that\nassessment. Simply stated, there is no \u201cexceptional circumstance\u201d present in the case. Indeed,\nPlaintiff\u2019s counsel undertook an extensive investigation into Defendants\u2019 alleged wrongdoing at\nissue in this case. Based on all of the information that was gathered during this investigation,\ncounsel spent months drafting the allegations of the complaint, and the ongoing investigation\ncontinued with each of the subsequently filed complaints. And, significantly, a prior Opinion in\nthis case held that Plaintiff did adequately plead that Mr. Honig had engaged in \u201ca deceptive act\u201d\nand a \u201cpattern of fraud\u201d with a \u201cstrong inference\u201d of \u201cscienter.\u201d See ECF No. 166, Judge\nWolfson\u2019s 4/10/2020 Opinion at 33, 36-37 (finding that \u201cPlaintiff has alleged sufficient facts to\nshow that Honig committed a deceptive act that falls within the range of conduct prohibited by\nSection 10(b) and Rule 10b-5\u201d; \u201c[Plaintiff\u2019s allegations] do suggest a pattern of fraud that lends\nconsiderable support to an inference that Honig knew that concealing his stock sales was\ndeceptive\u201d; and \u201cthe Complaint gives rise to a strong inference that Honig acted with scienter\u201d).\n\n That Your Honor later disagreed with Judge Wolfson\u2019s findings does not mean Plaintiff\n(or his counsel) must now face an automatic sanctions review. As the Third Circuit has made\nclear, Rule 11 \u201cmust not be used as an automatic penalty against an attorney or a party advocating\nthe losing side of a dispute.\u2019\u201d Galardo v. Ethyl Corp., 835 F.2d 479, 482 (3d Cir. 1987). See also\nHowe v. Litwack, 579 F. App\u2019x 110, 115 (3d Cir. 2014) (\u201c[T]he mere failure of a complaint to\nwithstand a motion for summary judgment or a motion to dismiss should not be thought to establish\na rule [11] violation.\u201d) (internal quotations and citation omitted).\n\n In sum, Rule 11 is not implicated in this proceeding. No party in this case violated Rule\n11 in any way.\n\n Should the Court wish to discuss this matter further, counsel for Plaintiff are available at\nthe Court\u2019s convenience.\n\n Respectfully,\n\n /s/ Joseph J. DePalma\n\n Joseph J. DePalma\n\nJJD:emp\n\ncc: All Counsel of Record (via ECF)\n\f","ocr_status":2,"date_upload":"2025-01-24T07:08:06.478796-08:00","document_number":"255","attachment_number":null,"pacer_doc_id":"119020656239","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2023-11-28T14:03:47.125033-08:00","date_modified":"2026-06-16T08:51:15.194810-07:00","date_filed":"2023-11-28","time_filed":"16:51:29","entry_number":255,"recap_sequence_number":"2023-11-28.002","pacer_sequence_number":919,"description":"Letter from Joseph J. DePalma to the Honorable Georgette Castner, U.S.D.J. re 253 Letter. (GREENBERG, BRUCE) (Entered: 11/28/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/371721610/","id":371721610,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/379212448/","id":379212448,"tags":[],"absolute_url":"/docket/6313843/254/takata-v-riot-blockchain-inc/","date_created":"2023-11-28T11:41:39.223521-08:00","date_modified":"2026-06-16T08:51:15.165477-07:00","sha1":"66e17f2816b143e5db5616e4d97c0b6c5976a077","page_count":3,"file_size":129364,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.254.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.254.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 254 Filed 11/28/23 Page 1 of 3 PageID:\n 10457\n\n\n\n UNITED STATES DISTRICT COURT\n DISTRICT OF NEW JERSEY\n\nCREIGHTON TAKATA, :\n : Civil Action No.: 18-2293-GC-RLS\n :\n Plaintiff, : JOINT STIPULATION OF\n : VOLUNTARY DISMISSAL OF\n v. : CLAIMS\n :\nRIOT BLOCKCHAIN, INC., et al. :\n :\n :\n Defendants. :\n\n Lead Plaintiff Dr. Stanley Golovac (\u201cPlaintiff\u201d) and Defendants Riot\n\nBlockchain, Inc., John O\u2019Rourke, Eric So, Jason Les, Mike Dai, Andrew Kaplan,\n\nJeffrey G. McGonegal, and Michael Beeghley (collectively, \u201cRiot Defendants\u201d), by\n\nand through their respective attorneys, jointly state as follows:\n\n WHEREAS, Plaintiff filed a Consolidated Third Amended Class Action\n\nComplaint on May 27, 2022 (ECF No. 231);\n\n WHEREAS, Defendants filed motions to dismiss the Consolidated Third\n\nAmended Class Action Complaint on July 18, 2022 (ECF Nos. 232, 233, 234);\n\n WHEREAS, Judge Georgette Castner dismissed the Consolidated Third\n\nAmended Class Action Complaint in an Opinion (ECF No. 251) and Order (ECF\n\nNo. 252) dated August 25, 2023, in which it was ordered that Plaintiff\u2019s claims were\n\ndismissed with prejudice.\n\n\n\n\n 1\n\fCase 3:18-cv-02293-GC-RLS Document 254 Filed 11/28/23 Page 2 of 3 PageID:\n 10458\n\n\n\n THEREFORE, IT IS HEREBY STIPULATED, by and between the\n\nundersigned parties, that:\n\n1. Pursuant to Rule 41(a)(1)(A)(ii), Plaintiff dismisses all claims in their entirety\n\n against the Riot Defendants with prejudice;\n\n2. Plaintiff hereby agrees to waive all rights to file an amended complaint and to\n\n appeal any order entered in favor of the Riot Defendants; and\n\n3. Each of Plaintiff and the Riot Defendants shall bear his, her, or its own\n\n attorneys\u2019 fees and costs incurred in connection with this action.\n\n Dated: November 28, 2023 PAUL HASTINGS LLP\n\n /s/ Chad J. Peterman\n Chad J. Peterman\n 200 Park Avenue\n New York, NY 10166\n Telephone: (212) 318-6797\n Facsimile: (212) 230-7797\n chadpeterman@paulhastings.com\n\n D. Scott Carlton (Admitted pro hac vice)\n 515 South Flower Street, Twenty-Fifth Floor\n Los Angeles, CA 90071-2228\n Telephone: (213) 683-6000\n Facsimile: (213) 627-0705\n scottcarlton@paulhastings.com\n\n HUESTON HENNIGAN LLP\n Thomas A Zaccaro (Admitted pro hac vice)\n 523 West 6th St., Suite 400\n Los Angeles, California CA 90014\n Telephone: (213) 788-4039\n tzaccaro@hueston.com\n\n\n\n 2\n\fCase 3:18-cv-02293-GC-RLS Document 254 Filed 11/28/23 Page 3 of 3 PageID:\n 10459\n\n\n\n Counsel for Defendants Riot Blockchain, Inc.,\n John O\u2019Rourke and Michael Beeghley\n\n LITE DEPALMA GREENBERG &\n AFANADOR, LLC\n\n /s/ Joseph J. DePalma\n Joseph J. DePalma\n 570 Broad Street, Suite 1201\n Newark, NJ 07102\n Telephone: (973) 623-3000\n Facsimile: (973) 623-0858\n jdepalma@litedepalma.com\n\n MOTLEY RICE LLC\n William S. Norton (Admitted pro hac vice)\n Joshua C. Littlejohn (Admitted pro hac vice)\n Christopher C. Moriarty(Admitted pro hac vice)\n 28 Bridgeside Boulevard\n Mt. Pleasant, SC 29464\n Telephone: (843) 216-9000\n Facsimile: (843) 216-9450\n bnorton@motleyrice.com\n jlittlejohn@motleyrice.com\n cmoriarty@motleyrice.com\n\n Counsel for Lead Plaintiff Dr. Stanley Golovac\n and Lead Counsel for the Class\n\n US MARKET ADVISORS LAW GROUP\n PLLC\n David P. Abel\n 5335 Wisconsin Ave. NW, Ste. 440\n Washington, D.C. 20015\n Telephone: (202) 274-0237\n Facsimile: (202) 686-2877\n dabel@usmarketlaw.com\n\n Counsel for Lead Plaintiff Dr. Stanley Golovac\n\n\n\n 3\n\f","ocr_status":2,"date_upload":"2025-01-24T07:08:19.958644-08:00","document_number":"254","attachment_number":null,"pacer_doc_id":"119020654294","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Stipulation of Dismissal (aty)","acms_document_guid":""}],"date_created":"2023-11-28T11:41:39.205011-08:00","date_modified":"2026-06-16T08:51:15.136767-07:00","date_filed":"2023-11-28","time_filed":"14:17:16","entry_number":254,"recap_sequence_number":"2023-11-28.001","pacer_sequence_number":917,"description":"STIPULATION of Dismissal of Claims (Voluntary) by MICHAEL BEEGHLEY, JOHN O'ROURKE, RIOT BLOCKCHAIN, INC.. (PETERMAN, CHAD) (Entered: 11/28/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/371625213/","id":371625213,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/379113543/","id":379113543,"tags":[],"absolute_url":"/docket/6313843/253/takata-v-riot-blockchain-inc/","date_created":"2023-11-27T14:02:54.319462-08:00","date_modified":"2026-06-16T08:51:15.108504-07:00","sha1":"7de0d1c3824bd8a9e0f003cb79eb51df63551413","page_count":2,"file_size":970337,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.253.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.253.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 253 Filed 11/27/23 Page 1 of 2 PageID:\n 10455\n Sheppard, Mullin, Richter & Hampton LLP\n 30 Rockefeller Plaza\n New York, New York 10112-0015\n 212.653.8700 main\n 212.653.8701 fax\n www.sheppardmullin.com\n\n\n\n tbaker@sheppardmullin.com\nNovember 27, 2023\n\n\nVIA ELECTRONIC FILING\n\nHonorable Georgette Castner\nU.S. District Court, District of New Jersey\nClarkson S. Fisher Federal Building & U.S. Courthouse\n402 East State Street\nTrenton, NJ 08608\n\nRe: Takata v. Riot Blockchain, Inc., et al., Civil Action No. 18-2293 (GC)(RLS)\n\nDear Judge Castner:\n\nWe represent and write on behalf of defendant Barry Honig.\n\nYour Honor recognized in your August 25, 2023 Opinion (ECF No. 251, at p. 11), that the\ncomplaints in this action were subject to the provisions of the Private Securities Litigation Reform\nAct (\u201cPSLRA\u201d), 15 U.S.C. \u00a7 78u, et seq.\n\nCertain provisions of the PSLRA require the Court to conduct a mandatory review for abusive\nlitigation at the time of final adjudication. For the Court\u2019s convenience, I quote the relevant\nprovisions here:\n\n(c) Sanctions for abusive litigation\n\n (1) Mandatory review by court\n\n In any private action arising under this chapter, upon final adjudication of the action, the court\n shall include in the record specific findings regarding compliance by each party and each\n attorney representing any party with each requirement of Rule 11(b) of the Federal Rules of\n Civil Procedure as to any complaint, responsive pleading, or dispositive motion.\n\n (2) Mandatory sanctions\n\n If the court makes a finding under paragraph (1) that a party or attorney violated any\n requirement of Rule 11(b) of the Federal Rules of Civil Procedure as to any complaint,\n responsive pleading, or dispositive motion, the court shall impose sanctions on such party or\n attorney in accordance with Rule 11 of the Federal Rules of Civil Procedure. Prior to making\n a finding that any party or attorney has violated Rule 11 of the Federal Rules of Civil\n Procedure, the court shall give such party or attorney notice and an opportunity to respond.\n\fCase 3:18-cv-02293-GC-RLS Document 253 Filed 11/27/23 Page 2 of 2 PageID:\n 10456\n\n\n\nHonorable Georgette Castner\nNovember 27, 2023\nPage 2\n\n\n (3) Presumption in favor of attorneys\u2019 fees and costs\n\n (A) In general\n\n Subject to subparagraphs (B) and (C), for purposes of paragraph (2), the court shall\n adopt a presumption that the appropriate sanction\u2014\n\n (i) for failure of any responsive pleading or dispositive motion to comply with any\n requirement of Rule 11(b) of the Federal Rules of Civil Procedure is an award to the\n opposing party of the reasonable attorneys\u2019 fees and other expenses incurred as a direct\n result of the violation; and\n\n (ii) for substantial failure of any complaint to comply with any requirement of Rule 11(b) of\n the Federal Rules of Civil Procedure is an award to the opposing party of the reasonable\n attorneys\u2019 fees and other expenses incurred in the action.\n\n15 U.S.C. \u00a7 78u-4(c)(1) \u2013 (3)(underlined emphasis added); see also, Scott v. Vantage Corp., 364\nF.4th 462 (3d Cir. 2023).\n\nBecause your August 25, 2023 Opinion did not include the PSLRA\u2019s required findings, we\npresume that they Court may still be considering whether Plaintiff and his counsel complied with\nthe requirements of Rule 11(b). Our motion to dismiss Plaintiff\u2019s Third Amended Complaint noted\nthat it offered nothing new with regard to Mr. Honig and thus resulted in redundant and wasteful\nmotion practice; your Opinion acknowledged this by stating \u201cPlaintiff rehash[ed] legal arguments\nthat have been previously considered and expressly rejected by the Court.\u201d (ECF No. 251, at p.\n25).\n\nWe are available to provide any additional information or briefing that the Court may find\nnecessary to make its findings.\n\nVery truly yours,\n\n/s/ Tyler E. Baker\n\nTyler E. Baker\nfor SHEPPARD, MULLIN, RICHTER & HAMPTON LLP\n\ncc: All Counsel (via ECF)\n\f","ocr_status":2,"date_upload":"2025-01-24T07:08:51.322455-08:00","document_number":"253","attachment_number":null,"pacer_doc_id":"119020651427","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2023-11-27T14:02:54.282520-08:00","date_modified":"2026-06-16T08:51:15.084957-07:00","date_filed":"2023-11-27","time_filed":"16:59:36","entry_number":253,"recap_sequence_number":"2023-11-27.001","pacer_sequence_number":914,"description":"Letter from Tyler E. Baker re 251 Opinion. (BAKER, TYLER) (Entered: 11/27/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/362991701/","id":362991701,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/369701041/","id":369701041,"tags":[],"absolute_url":"/docket/6313843/251/takata-v-riot-blockchain-inc/","date_created":"2023-08-25T08:39:49.938443-07:00","date_modified":"2026-06-16T08:51:15.017828-07:00","sha1":"25f33d96d9b5348a202c0db387056c49abdd136a","page_count":27,"file_size":966598,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.251.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.251.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 1 of 27 PagelD: 10427\n\n*NOT FOR PUBLICATION\u00ae*\n\nUNITED STATES DISTRICT COURT\nDISTRICT OF NEW JERSEY\n\nCREIGHTON TAKATA, Individually and on\nbehalf of all others similarly situated,\n\nPlaintiff, Civ. Action No. 18-2293 (GC) (RLS)\n\nv. OPINION\n\nRIOT BLOCKCHAIN, INC., ef ai,\n\nDefendants.\n\nCASTNER, District Judge:\n\nThis matter is a putative class action brought by shareholders against defendants Riot\nBlockchain, Inc. (\u201cRiot\u201d) and three of Riot\u2019s former officers, directors, and individual investors\n(collectively with Riot, \u201cDefendants\u201d). The court-appointed lead plaintiff, Dr. Stanley Golovac\n(\u201cPlaintiff\u201d), alleges that he, and other shareholders, purchased Riot\u2019s stock between April 20,\n2017, and September 6, 2018 (the \u201cClass Period\u201d), and asserts that Defendants violated Section\n10(b) of the Securities Exchange Act of 1934 (the \u201cExchange Act\u201d), 15 U.S.C. \u00a7 78j(b), and Rule\n10b-5 promulgated under that statute, 17 C.F.R, \u00a7 240.10b-5. Plaintiff also asserts that the three\nindividual defendants are vicariously liable under Section 20(a) of the Exchange Act, 15 U.S.C. \u00a7\n78t(a). Plaintiffs allegations in the TAC are largely consistent with those stated in the previous\niterations. In short, Plaintiff alleges that Defendants, acting in concert with an undisclosed\ninvestor group of other Riot shareholders, participated in a scheme to: (1) amass a controlling\ninterest in Riot; (2) conceal their control through false and misleading statements and omissions\n\nin violation of Section 13(d) of the Exchange Act, Regulation 13d, and Item 403 of Regulation S-\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 2 of 27 PagelD: 10428\n\nK; (3) inflate the price and trading volume of Riot stock through manipulative trading, promotional\nactivity, and false and misleading disclosures; (4) engage in undisclosed related-party transactions\nat the expense of the company and its shareholders in violation of Item 404 of Regulation S-K and\nTtem 1.01(a) of Form 8-K; and (5) dump their shares on unsuspecting retail investors. (See Third\nAmended Complaint (\u201cTAC\u201d) 9 1-6, ECF No. 231.)\n\nPresently before the Court are three separate motions, brought by Defendants, to dismiss\nthe Third Amended Complaint (\u201cTAC\u201d) pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules\nof Civil Procedure,! The Court has carefully considered the parties\u2019 submissions and decides the\nmotions without oral argument pursuant to Federal Rule of Civil Procedure 78 and Local Civil\nRule 78.1. For the reasons stated herein, and for other good cause shown, Defendants\u2019 motions to\ndismiss (ECF Nos. 232, 233, 234) are GRANTED, Plaintiff's claims are DISMISSED with\nprejudice.\n\nI. BACKGROUND\n\nThe following facts are drawn from the allegations in the TAC and are accepted as true for\nthe purposes of the present motions.\u201d The TAC alleges substantially the same facts as set forth in\nits previous iterations and recounted in the two prior Opinions of the Court in this matter? To the\n\nextent Plaintiffs allegations remain the same, a summary of the basic facts is included for context;\n\n' The separate motions to dismiss are as follows: ECF No, 232, by Riot Blockchain, Inc.; ECF No.\n233, by John O\u2019Rourke and Michael Beeghley; and ECF No, 234, by Barry Honig.\n\n* As noted in the Court\u2019s prior Opinions, on a motion to dismiss, while the Court may take judicial\nnotice of certain publicly available documents, such as SEC filings and court filings, it may only\ndo so to establish the existence of those records and the statements contained therein, and not (as\nPlaintiff again asks the Court to do) for the truth of the matter asserted in those documents. See\nAreand v. Brother Int\u2019l Corp., 673 F. Supp. 2d 282, 292 (D.N.J, 2009) (Wolfson, J.) (citations\nomitted); Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007).\n\n3 See Takata v. Riot Blockchain, Inc., No. 18-02293, 2022 WL 1058389 (D.N.J. Apr. 8, 2022);\nTakata v. Riot Blockchain, Inc., No. 18-02293, 2020 WL 2079375 (D.N.J. Apr. 30, 2020).\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 3 of 27 PagelD: 10429\n\nwhere there are differences or additions, the Court notes them below.\n\nA. Defendants and the Alleged Scheme\n\nDefendant Riot, formerly a medical products company known as Venaxis, and then\nBioptix, Inc., is a publicly traded company on the NASDAQ that entered the cryptocurrency\nindustry in October 2017.4 (TAC \u00a7\u00a7 21, 81, 83, 94.) Defendant John O\u2019Rourke (\u201cO\u2019Rourke\u201d)\nserved as Riot\u2019s Chairman and CEO from November 2017 to September 2018. Ud { 14.)\nDefendant Michael Beeghiey (\u201cBeeghley\u201d) served as Riot?s CEO from April 2017 to November\n2017, when he was replaced by O\u2019Rourke; as Riot\u2019s Chairman from January 2017 to November\n2017; and served on the Board of Directors from November 2016 to November 2017. Ud. 15.)\nDefendant Barry Honig (\u201cHonig\u201d) was an eleven percent plus shareholder of Riot during the Class\nPeriod. (Jd. \u00a7 13.) Honig sold at least 1,583,005 shares of his Riot stock for at least $17 million\nin proceeds during the Class Period, while maintaining close ties with Riot insiders such as\n\nO\u2019Rourke, Beeghley, and others, with whom he also had longstanding business ties and co-\n\n4 Riot\u2019s pivot from the medical products industry to cryptocurrency is set forth in detail in the\nCourt\u2019s April 30, 2020 Opinion, (See ECF No. 166.) As previously explained, this change in\nbusiness strategy coincided with a proxy fight that resulted in Defendant Honig and his purported\nassociates, including Defendants O\u2019Rourke and Beeghley, acquiring a controlling stake in Riot.\n(See id, at 5.)\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 4 of 27 PagelD: 10430\n\ninvestments.> (/d.)\n\nAccording to Plaintiff, Defendants acted in concert with an undisclosed investor group\n(referred to as the \u201cSelling Shareholders\u201d) to commit deceptive acts and otherwise disseminate\nfalse and misleading statements and omissions in violation of federal securities laws. Ud. {| 1.)\nSpecifically, Plaintiff alleges that Defendants engaged in a manipulative scheme to inflate Riot\u2019s\nstock price, while concealing Honig\u2019s sales of Riot stock, and that Honig\u2019s sales were planned and\ncoordinated with the Selling Stockholders, who constituted an investor \u201cgroup\u201d as defined by\nSection 13(d) of the Exchange Act, Regulation 13d, and Item 403 of Regulation S-K. Ud. 42.) In\naddition, Plaintiff alleges that O\u2019Rourke and Beeghley deceived Riot\u2019s public investors by\nannouncing and promoting corporate transactions in which Honig was a related party without\ndisclosing his involvement, contrary to Item 1.01(a) of Form 8-K and Item 404 of Regulation S-\nK. Ud. 94.) Plaintiff further points to a series of alleged corrective disclosures that ultimately\nrevealed such information to Riot\u2019s public investors, resulting in a sharp decline in Riot\u2019s stock\nprice. Ud. 45.)\n\nPlaintiff highlights that Defendants\u2019 scheme reflects the same modus operandi of other\n\n> Plaintiffs TAC lists numerous \u201cRelevant Non-Parties,\u201d consisting of Honig associates and\nHonig-associated entities, including: 2330573 Ontario, Inc.; Aifos Capital LLC; ATG Capital\nLLC; Biozone Pharmaceuticals, Inc.; Michael Brauser; Catherine DeFrancesco; Grander\nHoldings, Inc. 401K; Mark Groussman; GRQ Consultants, Inc, Roth 401K FBO Barry Honig;\nAlan Honig; Jonathan Honig; JAD Capital Inc; Kairos Global Technology Inc,; Edward M. Karr;\nHarvey Kesner; MabVax Therapeutics Holdings, Inc.; Marathon Digital Holdings, Inc,; Marcandy\nInvestments Corp.; Melechdavid Inc; MTG Capital Investments Inc.; Richard Molinsky;\nMUNDOmedia Ltd.; Nameste Gorgie Inc.; Northurst Inc.; Robert O\u2019Braitis; Paradox Capital\nPartners LLC; Pershing Gold Corp.; PolarityTE Inc.; Erick Richardson; John Stetson; Stetson\nCapital Management, LLC; Jason Theofilos; and Titan Multi-Strategy Fund [, Lid. (See TAC {ff\n16-48.) However, notably, the TAC abandons Plaintiff's previous theory that Honig led a group\nof investors, referred to as the \u201cHonig Group,\u201d in the alleged pump and dump scheme. The Honig\nGroup was previously alleged to consist of Honig, O\u2019Rourke, Beeghley, Mark Groussman, John\nStetson, and Catherine DeFrancesco. The TAC removes Groussman, Stetson, and DeFrancesco\nas defendants.\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 5 of 27 PagelD: 10431\n\npump-and-dump schemes allegedly orchestrated by Honig, O\u2019Rourke, and other Selling\nStockholders, which were the subject of a Securities and Exchange Commission (SEC)\nenforcement action in the Southern District of New York.\u00ae (/d. Jf 49-73.) Relying on the SEC\u2019s\nallegations in that separate action, Plaintiff sets forth the prior investments of Honig, O\u2019 Rourke,\nand certain previously named defendants in various companies, which are included in Plaintiff's\nlist of Relevant Non-Parties. (Ud. J] 52-68.) In each instance, Honig, O\u2019Rourke, and others\nallegedly engaged in a coordinated scheme to run up the stock price of a particular company and\nsubsequently dump their respective shares into an artificially inflated market. Ud.) The SEC\nultimately reached individual settlements with the defendants in that enforcement action, including\nHonig and O\u2019Rourke. Cad. J] 69-70 (citing SEC v. Honig, ef al., No. 1:18-cv-08175 (S.D.N_Y,)\n(ECF Nos, 152, 228).) Plaintiff also separately sets forth Beeghley\u2019s prior co-investment with\nHonig and O\u2019Rourke in PolarityTE Inc., and the various overlapping investments of Honig,\nO\u2019Rourke, Beeghley, and the Selling Stockholders in several other companies, which are named\nas Relevant Non-Parties. (/e. {{] 74-80.)\n\nB. Alleged False and Misleading Statements During the Class Period\n\nPlaintiff lists Defendants\u2019 numerous allegedly materially false and misleading statements\nand omissions during the Class Period. (/d. 4] 173-223.) These alleged statements and omissions\ngenerally fall into the four following categories.\n\nFirst, Riot, under the management of O\u2019Rourke and Beeghley, issued several public filings\nwith the SEC (on Forms 8-3, S-3/A, 10-K, 8-K, and 8-K/A) that omitted that Honig and the Selling\n\nStockhoiders were members of a group pursuant to an agreement or understanding to acquire, hoid,\n\n\u00ae The SEC\u2019s civil action is captioned SEC y. Honig, et al., No. 1:18-cv-08175 (S.D.N.Y,) (See\nTAC \u00a7 49 4.)\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 6 of 27 PagelD: 10432\n\nvote, and sell off their Riot shares in coordination with each other. (/d. 167.) Further, Plaintiff\nalleges that, starting in April 2017, six of Riot\u2019s Registration Statements (Forms $-3 and S-3/A}\naffirmatively state the opposite, representing that there were no agreements, arrangements, or\nunderstandings with respect to the sale of Riot stock. Ud. JJ 109, 168, 181-88, 191-99, 209-20.)\n\nSecond, Riot issued Forms 8-K and 8-K/A with respect to three separate transactions that\nfailed to disclose the transactions involved Honig. Ud 4170.) The three related-party transactions\ninclude: (i) the \u201cMarch 2017 Private Placement\u201d by which Riot sold $2,250,000 units of its\nsecurities to Honig; (ii) the October 2017 \u201cCoinsquare Agreement\u201d by which Riot purchased\n$3,000,000 of units of Coinsqaure, a company in which Honig and several Selling Stockholders\nwere co-investors; and (iii) the November 2017 \u201cKairos Transaction\u201d where Riot, in order to\nacquire computer equipment and other assets used for mining cryptocurrency, purchased a [00%\nownership interest in Kairos, a company in which Honig and another Selling Stockholder were\nshareholders. (Ud. 92-108, 170.)\n\nThird, on February 16, 2018, CBNC published statements made by O\u2019Rourke and Honig\nin which they both continued to conceal the alleged scheme by denying that O\u2019 Rourke worked out\nof Honig\u2019s office; downplayed Honig\u2019s influence over Riot; and denied that Riot was engaged in\nSEC disclosure violations. (/d. \u00a7] 171i, 221-23.)\n\nAnd fourth, that same day, Riot filed a Form 8-K attaching a letter from O\u2019Rourke\naddressed to Riot\u2019s shareholders in which he again denied any disclosure violations by Riot. (/d.\nqf 172, 221-23.)\n\nCc. Revelation of the Alleged Scheme\n\nBeginning in December of 2017, a series of news outlets and investment analysts began\n\nreporting their suspicions of an alleged pump-and-dump scheme being perpetrated at Riot by\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 7 of 27 PagelD: 10433\n\nHonig, O\u2019Rourke, and others, Ud. Jf] 118-20,125-41.) Plaintiff alleges that, following each of\nthese revelations in the media and other public disclosures filed around the same time, Riot\u2019s stock\nprice dropped precipitously. (/d.) Plaintiff draws from and directly incorporates information from\nmedia reports and public disclosures, which detail Honig\u2019s allegedly covert sale of Riot stock\nduring the Class Period, his close business relationships with O\u2019Rourke and other Selling\nStockholders, and his connection to the March 2017 Private Placement, the Kairos Transaction,\n\nand the Coinsquare Agreement.\u2019 (/d.)\n\nD. Plaintiff\u2019s Claims\n\nPlaintiff asserts three separate counts in the TAC, which largely mirror those previously\nbefore the Court. (See TAC Jf 264-81.) Count I sets forth alleged violations of Section 10(b) of\nthe Exchange Act and Rule 10b-5, subsections (a) and (c), as to all Defendants. Ud. Jf] 264-69.)\nFirst, Plaintiff claims that O\u2019Rourke and Beeghley, as officers or directors of Riot, pursuant to an\nexplicit or tacit scheme or plan with Honig, caused Riot to issue materially false and misleading\nstatements in SEC filings\u2014including on Forms 8-3, S-3/A, 8-K, 8-K/A, 10-K and Schedule 14A\u2014\nthat misrepresented Riot\u2019s beneficial ownership in violation of Section 13(d) and Item 403 of\n\nRegulation S-K by concealing that many of Riot\u2019s largest shareholders, including Honig, were\n\nmembers of a group as defined by Section 13(d)(3). Ud \u00a7 266.) Plaintiff also claims that\n\nO\u2019Rourke, Beeghley, and Riot issued materially false and misleading Forms 8-K and 10-I\u00a2 that\nmisrepresented and concealed related-party transactions between and among Riot and Riot\u2019s\ncontrolling (i.\u00a2., greater-than-5%) shareholders, including Honig. (ad) Second, Plaintiff claims\n\nthat, as part of the alleged scheme, Honig coordinated with other Riot shareholders to artificially\n\n7 The Court has previously summarized Plaintiff's allegations in this respect in its April 30, 2020\nOpinion (ECF No, 166). See Takata, 2020 WL 2079375, at *4-5,\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 8 of 27 PagelD: 10434\n\ninflate Riot\u2019s stock price by failing to disclose pertinent ownership and stock sale information to\nthe public, thereby painting a false picture of the market. (/d. \u00a2 267.)\n\nCount II asserts violations of Section 10(b) and Rule 10b-5(b), against ali Defendants. (/d.\n{4 270-77.) Plaintiff claims that Defendants disseminated or approved false statements and failed\nto disclose the material facts necessary to make the statements, in light of the circumstances, not\nmaterially misleading. (/d. { 272.) Plaintiff claims that Defendants failed to disclose that Riot\u2019s\nlargest shareholders, including Honig, were members of a group and concealed various related-\n\nparty transactions between and among Riot and greater-than-five percent shareholders of Riot,\n\nincluding Honig. Ud. 273.)\n\nCount III asserts liability under Section 20(a) of the Exchange Act against O\u2019 Rourke, |\nBeeghley, and Honig. Plaintiff claims that they are vicariously liable as \u201ccontrolling persons\u201d for |\nany materially false and misleading statements made by Riot. Ud. ff] 278-81.)\n\nKE. Procedural History\n\nPlaintiff filed the initial complaint in this action (ECF No. 1) on February 17, 2018 and\n\nfiled a corrected and consolidated amended complaint (\u201cCCAC\u201d, ECF No. 73) on May 9, 2019,\n\nThe Court dismissed Plaintiff's claims without prejudice. (ECF No. 166.) In its April 30, 2020\n\nOpinion, the Court held that: (1) Plaintiff failed to plead any actionable misrepresentations or\nomissions in Riot\u2019s registration and proxy statements because Plaintiff failed to allege that any of\nthe alleged statements were materially false or misleading (Ud. at 27-28); (2) Plaintiff failed to\nallege a \u201cdeceptive or manipulative act\u201d with respect to Beeghley or O\u2019 Rourke, and other now-\nomitted defendants (/d, at 40); (3) Plaintiff adequately alleged that Honig committed a \u201cdeceptive\nor manipulative act\u201d and with the requisite scienter but failed to plead the element of loss causation\n\nwith respect to Honig (/d.); and (4) Plaintiff failed to plead any facts showing underlying violations\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 9 of 27 PagelD: 10435\n\nby Riot because Plaintiff did not adequately allege any of his claims under Section 10(b) of the\nExchange Act (Ud. at 41).\n\nPlaintiff subsequently filed the Second Amended Complaint. (ECF No. 188.) Upon the\nmotions of Defendants and others now omitted, the Court again dismissed Plaintiff's claims\nwithout prejudice. (ECF No. 223.) In its April 8, 2022 Opinion, the Court concluded that: (1)\nfailure to disclose information required by Section 13(d) does not give rise to a private right of\naction for damages under Section 10(b); and (2) nor do violations of Items 403 and 404 of\nRegulation S-K. Ud. at 20-22.)\n\nThereafter, Plaintiff filed the TAC. (See generally TAC.) Defendants again moved to\ndismiss, filing three separate motions, (ECF No, 232-1; ECF No. 233-1; ECF No. 234-1.) Plaintiff\nopposed each motion. (ECF No. 240; ECF No. 239; ECF No. 241.) Defendants separately replied.\n(ECF No. 243; ECF No. 244; ECF No. 242.)\n\nIk. LEGAL STANDARD\n\nA. Rule 12(b)(6)\n\nCourts undertake a three-part analysis when considering a motion to dismiss pursuant to\nFederal Rule of Civil Procedure 12(b)(6). See Malleus v. George, 641 F.3d 560, 563 (3d Cir.\n2011). \u201cFirst, the court must \u2018tak[e] note of the elements a plaintiff must plead to state a claim.\u2019\u201d\nId. (alteration in original) (quoting Asheroft v. Igbal, 556 U.S. 662, 675 (2009)). Second, the court\nmust accept as true all of the plaintiff's well-pleaded factual allegations and \u201cconstrue the\ncomplaint in the light most favorable to the plaintiff\u201d Fowler v. UPMC Shadyside, 578 F.3d 203,\n210 (3d Cir, 2009) (internal quotation marks omitted). In doing so, the court is free to ignore legal\nconclusions or factually unsupported accusations that merely state, \u201cthe-defendant-unlawfully-\n\nharmed-me.\u201d Jgbal, 556 U.S, at 678 (citing Bell Atl, Corp. v. Twombly, 550 U.S. 344, 555 (2007).\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 10 of 27 PagelD: 10436\n\n\u201c(Mlere restatements of the elements of [a] claim []... are not entitled to the assumption of truth.\u201d\nBurtch vy. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011) (alterations in original) (citation\nomitted). Finally, the court must determine whether \u201cthe facts alleged in the complaint are\nsufficient to show that the plaintiff has a \u2018plausible claim for relief.\u2019\u201d Fowler, 578 F.3d at 211\n(quoting Igbal, 556 U.S. at 679). \u201cThe defendant bears the burden of showing that no claim has\nbeen presented.\u201d Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005) (citation omitted),\n\nB. Rule 9(b)\n\n\u201cIndependent of the standard applicable to Rule 12(b)(6) motions,\u201d Rule 9(b) of the Federal\nRules of Civil Procedure \u201cimposes a heightened pleading requirement of factual particularity with\nrespect to allegations of fraud.\u201d Jn re Rockefeller Cir. Props., Inc, Sec. Litig., 311 F.3d 198, 216\n(3d Cir. 2002), Rule 9(b) states, in pertinent part: \u201cIn alleging fraud or mistake, a party must state\nwith particularity the circumstances constituting fraud or mistake.\u201d Fed. R, Civ. P. 9(b). To satisfy\nthis heightened pleading standard, a plaintiff must state the circumstances of its alleged cause of\naction with \u201csufficient particularity to place the defendant on notice of the \u2018precise misconduct\nwith which [it is] charged.\u2019\u201d /*rederico v. Home Depot, 507 F.3d 188,200 (3d Cir. 2007) (quoting\nLum y. Bank of America, 361 F.3d 217, 223-24 (3d Cir. 2004) (alteration in original)). Specificaily,\nthe plaintiff must plead or allege the \u201cdate, time and place of the alleged fraud or otherwise inject\nprecision or some measure of substantiation into a fraud allegation.\u201d /d. (citing Lum, 361 F.3d at\n224). The Third Circuit has further explained that, at a minimum, Rule 9(b) requires a plaintiff to\nallege the \u201cessential factual background that would accompany \u2018the first paragraph of any\nnewspaper story\u2019\u2014that is, the \u2018who, what, when, where and how\u2019 of the events at issue.\u201d Jn re\nSuprema Specialties, Inc. Sec. Litig., 438 F.3d 256, 276-77 (3d Cir. 2006) (quoting Jn re\n\nRockefeller, 341 F.3d at 217).\n\n10\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 11 of 27 PagelD: 10437\n\nC. PSLRA\n\nTn addition to the plausibility analysis under Rule 12(b)(6) and the heightened pleading\nrequirements of Rule 9(b}, Congress enacted the Private Securities Litigation Reform Act\n(\u201cPSLRA\u201d), 15 U.S.C \u00a7 78u, ef seg., to require an even higher pleading standard for plaintiffs\nbringing private securities fraud actions. See In re Suprema, 438 F.3d at 276. This heightened\npleading standard is targeted at preventing abusive securities litigation. See Tellabs, Inc. v, Makor\nIssues & Rights, Ltd., 551 U.S, 308, 320 (2007) (stating that the PSLRA was \u201c[d]esigned to curb\nperceived abuses of the \u00a7 10(b) private action\u2014nuisance filings, targeting of deep-pocket\ndefendants, vexatious discovery requests and manipulation by class action lawyers\u2019) (citations and\ninternal quotation marks omitted).\n\nThe PSLRA\u2019s heightened pleading standard has two distinct requirements. First, the\ncomplaint must \u201cspecify each statement alleged to have been misleading, the reason or reasons\nwhy the statement is misleading, and, if an allegation regarding the statement or omission is made\non information and belief, the complaint shall state with particularity all facts on which that belief\nis formed.\u201d 15 U.S.C, \u00a7 78u-4(b)(1). Second, the complaint must, \u201cwith respect to each act or\nomission alleged to violate this chapter, state with particularity facts giving rise to a strong\ninference that the defendant acted with the required state of mind.\u201d 15 U.S.C. \u00a7 78u-4(b)(2)(A).\nBoth provisions require that facts be pleaded \u201cwith particularity.\u201d See Institutional Inv\u2019rs Grp. v.\nAvaya, Inc., 564 F.3d 242, 253 (3d Cir. 2009) (stating that \u201cRule 9(b)\u2019s particularity requirement\nis comparable to and effectively subsumed by the requirements of ... the PSLRA\u201d) (citations and\ninternal quotation marks omitted). Furthermore, under the second requirement, a \u201cstrong\ninference\u201d exists \u201conly if a reasonable person would deem the inference of scienter cogent and at\n\nleast as compelling as any opposing inference one could draw.\u201d Tellabs, 551 U.S, at 324 (2007).\n\n1]\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 12 of 27 PagelD: 10438\n\nI. DISCUSSION\n\nDefendants move to dismiss Plaintiff's TAC with prejudice, arguing that the Court has\ntwice dismissed Plaintiff's claims for failure to allege cognizable misstatements or omissions\nunder Rule 10b-5 and that Plaintiff now fails to set forth any new facts or legal theories that would\nchange the Court\u2019s analysis. (See ECF No. 232-1 at 8.)\u00ae\n\nFirst, Defendants assert that Plaintiff cannot allege an affirmative duty of disclosure under\nItem 404 of Regulation S-K, Item 403 of Regulation S-K, or Item 1.01 of Form 8-K to support\nliability pursuant to Section 10(b), (See id. at 8.) Second, Defendants argue that Plaintiff cannot\notherwise point to any statements or disclosures that were materially false or misleading to support\nSection 10(b) lability, (See id. at 38-40.) Third, Defendants highlight that Plaintiff's Section\n10(b) claims are, once again, not supported by sufficient allegations of loss causation, (See id, at\n34-38.) O\u2019Rourke and Beeghley separately emphasize that Plaintiff merely repackages prior\nallegations of scienter that the Court has previously rejected as deficient. (See ECF No, 233-1. at\n9-12.) Honig adds that, although the Court previously held that violations of Section 13(d) do not\ngive rise to a private right of action for damages under Section 10(b), Plaintiff reasserts a Section\n10(b) claim based on the same conduct that the Court already ruled to be nonactionable. (See ECF\nNo. 234-1 at 8.)\n\nAs set forth in further detail below, Plaintiff's TAC (i) fails to cure the pleading deficiencies\npreviously identified by the Court and (ii) fails to set forth a viable cause of action against\nDefendants based on conduct that has now been the subject of several complaints, Accordingly,\n\nPlaintiff's claims are dismissed with prejudice.\n\n\u00b0 O\u2019Rourke, Beeghley, and Honig fully join, and incorporate by reference, the arguments presented\nby Riot in its motion. (See ECF No. 233-1 at 1; ECF No, 234-1 at 1.)\n\n12\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 13 of 27 PagelD: 10439\n\nA. The Section \u00a30(b) Claims (Counts I & ID\n\nSection 10(b) of the Exchange Act makes it unlawful \u201cto use or employ, in connection with\nthe purchase or sale of any security ... any manipulative or deceptive device or contrivance in\ncontravention of such rules and regulations as the Commission may prescribe...,\u201d 15 U.S.C \u00a7\n78j(b). To implement Section 10(b), the SEC enacted Rule 10b-5, which makes it unlawful:\n\n(a) To employ any device, scheme, or artifice to defraud,\n\n(b) To make any untrue statement of a material fact or to omit to state a material fact\n\nnecessary in order to make the statements made, in the light of the circumstances under\n\nwhich they were made, not misleading, or\n\n(c) To engage in any act, practice, or course of business which operates or would operate\n\nas a fraud or deceit upon any person, in connection with the purchase or sale of any security,\n\nin connection with the purchase or sale of any security.\n\n[17 C.FLR. \u00a7 240.10b-5.j\nThe TAC asserts liability under each of the three subsections of Rule 10b-5 for Defendants\u2019 alleged\nconduct. (See TAC ff] 264-77.)\n\nf, Rule 10b-5(b) Liability\n\nTo state a claim under Rule 10b-5(b), a plaintiff must adequately plead \u201c(1) a material\nmisrepresentation or omission by the defendant; (2) scienter, (3) a connection between the\nmisrepresentation or omission and the purchase or sale of a security; (4) reliance upon the\nmisrepresentation or omission; (5) economic loss; and (6) loss causation.\u201d Matrixx Initiatives, Inc.\ny. Siracusano, 563 U.S. 27, 37-38 (2011) (quoting Stoneridge Investinent Pariners, LLC vy.\nScientific-Atlanta, Inc., 552 U.S. 148, 157 (2008)). Plaintiffs prior complaint asserted two grounds\nfor material misrepresentations or omissions under Rule 10b-5(b): (1) Riot failed to disclose\n\nrelated-party transactions in violation of Item 404 of Regulation S-K and (2) Riot failed to disclose\n\nthat Honig and the Selling Stockholders were members of a \u201cgroup\u201d in violation of Item 403 of\n\n13\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 14 of 27 PagelD: 10440\n\nRegulation S-K. In the TAC, Plaintiff repeats those allegations and adds that the failure to disclose\nthe related-party transactions also violated Item 1.01 of Form 8-K. (See TAC 4] 266-67.)\n\nAs the Court explained in its April 8, 2022 Opinion, \u201c[t]he Third Circuit has held that, in\norder to show liability under Section 10(b) for... Regulation S-K items, a plaintiff must first\nestablish that the regulation creates an independent private right of action or that the regulation\nimposes an affirmative duty of disclosure that, if violated, would constitute a material omission\nunder Rule 10b-5.\u201d (ECF No. 223 at 21 (quoting Oran v. Stafford, 226 F.3d 275, 287 (3d Cir.\n2000)).) Plaintiff does not argue that a private right of action exists for Items 403 or 404 of\nRegulation S-K or Item 1,10 of Form 8-K\u2014the Court\u2019s April 8, 2022 Opinion forecloses that\nargument. (See id. at 21-22.) Rather, Plaintiff contends that such provisions create \u201can affirmative\nduty to disclose,\u201d and failure to comply constitutes a material omission under Rule 10b-5(b), (See\nTAC 9f 177, 185, 187, 189, 204-05.)\n\nUnder Third Circuit law, in determining whether a regulation creates a duty of disclosure\nthat, if violated, would constitute a material omission under Section 10(b) and Rule 10b-5, courts\n\u201cmust examine whether the disclosure mandated by [the regulation] is governed by standards\nconsistent with those that the Supreme Court has imposed for private fraud actions under the\nfederal securities laws.\u201d Oran, 226 F.3d at 287. Under Rule 10b-5, \u201c[mJaterial information is\n\u2018information that would be important to a reasonable investor in making his or her investment\ndecision.\u2019\u201d Je. at 282 (quoting /n re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1417 Gd\nCir.1997)), \u201cGenerally, undisclosed information is considered material if there is a substantial\nlikelihood that the disclosure would have been viewed by the reasonable investor as having\nsignificantly altered the total mix of information available to that investor.\u201d Jd. (internal quotation\n\nmarks and citations omitted). Where the materiality standards for Rule 10b-5 and a particular\n\n14\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 15 of 27 PagelD: 10441\n\nstatute or regulation \u201cdiffer significantly,\u201d a violation of the statute or regulation\u2019s reporting\nrequirements \u201cdoes not automatically give rise to a material omission under Rule 10b-5.\u201d Id.\n(holding that \u201ca violation of SK-303\u2019s reporting requirements does not automatically give rise to\na material omission under Rule 10b-5\u201d). Here, Plaintiff's claims rest largely on alleged\nomissions\u2014failure to disclose a purported investor group in certain SEC filings and related parties\nin connection with three transactions during the Class Period. (See TAC {ff 167, 170.)\n\na) Disclosure of Section 13(d) Group (Item 403)\n\nPlaintiff alleges that Riot\u2019s failure to disclose that Honig and the Selling Stockholders were\nacting as a group, as defined by Section 13(d), in its Forms S-3, S-3/A, 10-K, 8-K, and 8-K/A\nviolated Item 403 of Regulation S-K, giving rise to Rulel0b-5 liability. GSee fd. ff} 167-69.)\nDefendants move to dismiss, arguing that (i) Item 403\u2019s reporting requirements do not resemble\nRule 10b-5\u2019s requirements and (ii) Plaintiff fails to sufficiently allege the existence of a group that\nwould have required disclosure under Item 403. (See ECF No. 232 at 29-38.)\n\nItem 403(a) requires disclosure of certain identifying information \u201cwith respect to any\nperson (including any \u2018group\u2019 as that term is used in section 13(d)(3) of the Exchange act) who is\nknown to the registrant to be the beneficial owner of more than five percent of any class of the\nregistrant\u2019s voting securities.\u201d 17 C.F.R. \u00a7 229.403(a). Section 13(d) of the Exchange Act defines\na \u201cgroup\u201d as \u201ctwo or more persons [who] act as a partnership, limited partnership, syndicate, or\nother group for the purpose of acquiring, holding, or disposing of securities of an issuer[.}? 15\nU.S.C. \u00a7 78m(d)(3).\n\nHere, as Defendants argue, Item 403\u2019s disclosure requirements do not mirror the\nmateriality requirements of Rule 10b-5. (See ECF No. 232-1 at 29-30.) Item 403 requires\n\ndisclosure of a Section 13(d) group if the registrant knows that such group exists, regardless of\n\n15\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 16 of 27 PagelD: 10442\n\nwhether the existence of such a group is important to a reasonable investor or whether it would\nalter the total mix of information available to that investor. As such, there is no basis for the Court\nto find that a disclosure failure under Item 403 automatically gives rise to a material omission\nunder Rule 10b-5. See Oran, 226 F.3d at 288.\n\nThat said, even assuming, as Plaintiff argues, that such an omission would be material\nunder the alleged circumstances (see ECF No. 240 at 31-36), Plaintiff ultimately fails to plausibly\nestablish the existence of a Section 13(d) group requiring disclosure by Riot, Section 13(d)\nrequires the \u201cmembers of the \u2018group\u2019 to have agreed to act together for the purpose of acquiring\nnot just any security, but securities of a particular issuer.\u201d Rubenstein v. Int'l Value Advisers, LLC,\n363 F. Supp. 3d 379, 392 (S.D.N.Y. 2019), aff'd, 959 F.3d 541 (2d Cir. 2020). But the TAC fails\nto set forth any activity by Honig and the Selling Stockholders that demonstrates they acted as a\ngroup \u201cfor the purpose of acquiring, holding, or disposing of securities\u201d of Riot. 15 U.S.C, \u00a7 78m,\n\nFirst, Plaintiff cannot establish a Section 13(d) group based on investments and activities\nat companies other than Riot. See Log On Am., Inc. v, Promethean Asset Mgmt. L.L.C., 223 F.\nSupp. 2d 435, 448 (S.D.N.Y. 2001) (finding that.allegations of previous investments and\nfraudulent conduct among defendants insufficient to support existence of group with respect to\nrelevant issuer). Plaintiff provides extensive background information regarding Honig\u2019s and the\n\nSelling Stockholders\u2019 prior investment activities at other companies, drawing directly from the\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 17 of 27 PagelD: 10443\n\nallegations in SEC vy. Honig? (See TAC J] 49-80.) However, such borrowed allegations, which\nare unrelated to Riot and pre-date the Class Period, are insufficient to demonstrate a Section 13(d)\ngroup requiring disclosure by Riot. Second, Plaintiffs allegations that do tend to focus on Riot\nfail to show any coordinated investment activity by Honig and the Selling Stockholders. (See id.\n{ 81-91.) For instance, Plaintiff alleges that Honig and another Selling Stockholder shared\ncounsel in connection with an agreement related to Riot\u2019s Board of Directors and that Honig shared\nan office with O\u2019Rourke for some period of time. (See TAC ff 88, 151, 162.) While such\nallegations may give rise to the inference of business relationships, nothing in the TAC\ndemonstrates joint investment activity at Riot by Honig, O\u2019Rourke, or the Selling Stockholders.\nIndeed, two or more persons do not become a group within the meaning of Section 13(d)(3) unless\nthey \u201cact as a partnership, limited partnership, syndicate, or other group for the purpose of\nacquiring, holding, or disposing of securities of an issuer[.]\u201d 15 U.S.C. \u00a7 78m(d)(3) . Aside from\n\nconchisory allegations of coordination, Plaintiff does not specify any unified group activity as to\n\n\u00b0 The parties vigorously dispute the propriety of Plaintiff's reliance on allegations from the SEC\u2019s\ncomplaint in SEC v. Honig. For instance, in opposition to the O\u2019Rourke/Beeghley motion to\ndismiss, Plaintiff contends that \u201c[c]ourts routinely hold that where a plaintiff does her own\ninvestigation, allegations relied on from other litigants in other cases can be considered\u201d and that\nthere is no rule barring a private plaintiff from relying on government pleadings to meet his or her\nburden. (See ECF No. 239 at 27.) Additionally, in a supplemental submission, Plaintiff argues the\nsame. (See ECF No, 246 at 3.) While the Court does not discount the utility of allegations found\nin SEC or other government pleadings, the value of such allegations is considerably diminished,\nparticularly in light of the heightened pleading standards of the PSLRA, where, as here, such\nallegations concern conduct unrelated to the company at issue. See SEC y. Lee, 720 F. Supp. 305,\n340-41 (S.D.N.Y. 2010).\n\n17\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 18 of 27 PagelD: 10444\n\nthe acquisition, holding, or disposition of Riot stock.!\u00b0\n\nAs Defendants highlight, the insufficiency of Plaintiff's allegations in this regard are\nunderscored by comparison to the SEC complaint in SEC y, Honig, upon which Plaintiff heavily\nrelies and attaches to the TAC. (See TAC, Ex. C.} Therein, the SEC sets forth allegations as to\neach member of the alleged group\u2019s agreement and participation in coordinated investment\nactivities with respect to the companies at issue in the complaint. (See id. Jf] 74-81, 94-99, 109,\n143-54,) Here, Plaintiff's failure to do the same undermines Plaintiff's assertion ofa Section 13(d)\ngroup at Riot and, similarly, renders Plaintiff's duty of disclosure theory under Item 403\nunactionable.\n\nb) Disclosure of Related-Party Transactions (Item 404 & Item 1.01)\n\nPlaintiff alleges that Riot failed to disclose related-party transactions in its Forms 8-K and\n10-K, including the March 2017 Private Placement, the Coinsquare Agreement, and the Kairos\nTransaction, in violation of Item of 404 of Regulation S-K. (See TAC 4] 170, 173-80, 200-08.)\nPlaintiff also asserts that Riot\u2019s failure to disclose the identities of Honig and other investors in\nconnection with such transactions violated Item 1.01 of Form 8-K. Ud ff] 173, 201, 206.)\nAccording to Plaintiff, these purported violations imply Rule 10b-5 liability, Ud. 273.) Moving\nto dismiss Plaintiff's claims, Defendants argue that (i) the disclosure requirements of Item 403 and\nItem 1.01 alone do not give rise to a Section 10(b) claim and (ii) the relevant disclosure\n\nrequirements were not triggered by the transactions in question and, even if they were,\n\n'0 Plaintiffs claim based on Item 403 violations fails for the additional, independent reason that\nthe TAC does not allege with specificity that Riot, O\u2019Rourke, or Beeghley actually knew of the\nexistence of a purported Section 13(d) group led by Honig. 17 C.F.R. \u00a7 229.403, Plaintiff's theory\nregarding O\u2019Rourke\u2019s knowledge of the alleged group relies on deficient allegations of prior\ninvestment relationships at other companies. (See TAC {ff 160-63.) With respect to Beeghley,\nPlaintiff merely mentions Beeghley\u2019s role as a director at another company with ties to Honig.\n(See id. J 76.)\n\n18\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 19 of 27 PagelD: 10445\n\nnondisclosure was not a material omission. (See ECF No. 232-1 at 18-29.)\n\nItem 404 requires the registrant to describe any transaction \u201cin which the registrant was or\nis to be a participant and the amount involved exceeds $120,000, and in which any related person\nhad or will have a direct or indirect material interest.\u201d 17 C.F.R. \u00a7 229.404(a). Similar to the\ndisclosure guidelines for SEC filings set forth in Regulation S-K, Item 1.01 provides disclosure\ninstructions to registrants completing Forms 8-K, (See ECF No, 232-2, Ex. E.) Specifically, Item\n1.01 directs registrants to file a Form 8-K if the registrant has entered into a material definitive\nagreement not made in the ordinary course of business, and requires disclosure of: (1) the date of\nthe agreement; (2) the identity of the parties to the agreement; (3) a brief description of any material\nrelationship between the registrant and any of the parties; and (4) a brief description of the terms\nand conditions of the agreement that are material to the registrant. (See id.)\n\nLike Plaintiffs Item 403 theory, the Court cannot find that a violation of Item 404 or Item\n1.01 automatically gives rise to a material omission under Rule 10b-5, as each requires disclosure\nof information that does not meet Rule1 Ob-5\u2019s higher standard of materiality. See Oran, 226 F.3d\nat 288. Still, Plaintiff argues that Riot\u2019s purported violations of Item 404 and Item 1.01 were\nmaterial omissions in light of the circumstances alleged in the TAC. (See ECF No. 240 at 39-40.)\nPlaintiffs theories with respect to both Item 404 and Item 1.01 suffer pleading deficiencies.\n\nItem 404. Plaintiff alleges that, by virtue of his investments in Coinsquare and Kairos,\nHonig should have been identified in Riot\u2019s Forms 8-K on October 4, 2017 and November 3, 2017,\nrespectively, as Item 404 requires disclosure of related parties in transactions with the registrant.\n(See TAC 4 96-108.) But the instructions to Item 404 also set forth certain exclusions to its\ndisclosure requirements. 17 C.F.R. \u00a7 229.404(a). Relevant here, as Defendants argue that, under\n\nInstruction 6 of Item 404, Honig\u2019s less than ten percent interest in either Coinsquare or Kairos at\n\n19\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 20 of 27 PagelD: 10446\n\nthe time of the transactions excluded him from the disclosure requirements of Item 404(a)}, See 17\nC.F.R, \u00a7 229.404(a), inst. 6; see also Unite Here v, Cintas Corp., No.06-7061, 2006 WL 2859279,\nat *6 (S.D.N.Y. Oct. 6, 2006). In fact, Instruction 6 of Item 404 expressly contemplates\ntransactions in which an equity holder of the registrant is also an equity holder of the other\ntransacting party\u2014stating that, where the equity holder owns fess than a ten percent interest in the\nother transacting party, such a situation does not amount to an \u201cindirect material interest\u201d requiring\ndisclosure. 17 C.F.R. \u00a7 229.404(a), inst. 6. Plaintiff ultimately fails to provide any support for the\nnotion that Honig, or the Selling Stockholders, were somehow direct parties to Riot\u2019s transactions\nwith Coinsquare and Kairos or demonstrating the inapplicability of the exclusion set forth in\nInstruction 6. (See ECF No, 240 at 30-33.) In this way, Plaintiff cannot show that Riot failed to\ndisclose a direct or indirect material interest in either transaction under Item 403, let alone one that\namounted to a material omission under Rule 10b-5.\n\nWith respect to the March 2017 Private Placement, Plaintiff alleges that Riot failed to\ndisclose Honig by name in its March 16, 2017 Form 8-K and its March 31, 2017 Form 10-K, (See\nTAC {ff 173, 178.) But Plaintiff does not explain how Riot\u2019s mere failure to identify Honig by\nname as the purchaser in the March 2017 Private Placement amounts to a material omission that\n\u201cwould have been viewed by the reasonable investor as having significantly altered the total mix\nof information available to that investor.\u201d Oran, 226 F.3d at 282. As explained above, even if the\nnondisclosure of Honig\u2019s name amounted to a technical violation of Item 404, that omission does\nnot necessarily support a Rule 10b-5 claim. See Stephens v. Uranium Energy Corp., No. H-15-\n1862, 2016 WL 3855860, at *21 (S.D. Tx. July 15, 2016) (holding that \u201calleged omissions from\nthe Item 404 disclosures\u201d of names of related persons in related-party transactions \u201cwere not\n\nmaterial and cannot support [] Rule 10b-5(b) claims\u201d).\n\n20\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 21 of 27 PagelD: 10447\n\nItem 1.01, Plaintiff cannot salvage a Section 10b-5 claim as to the Coinsquare Agreement,\nthe Kairos Transaction, or the March 2017 Private Placement based on Item 1.01. Plaintiff claims\nthat Riot\u2019s October 4, 2017 Form 8-K and November 3, 2017 Form 8-K were false and misleading\nbecause they failed to disclose Honig\u2019s status as a shareholder in Coinsquare and Kairos,\nrespectively. (See TAC \u00a7f] 204, 207.) However, because Honig and the Selling Stockholders were\nnot \u201cparties to the agreement\u201d in either instance, but rather mere shareholders of the transacting\nentities, disclosure was not required under Item 1.01. Plaintiff also claims that Riot\u2019s failure to\ndisclose Honig as a party to the March 2017 Private Placement amounted to a violation of Item\n1.01. (See TAC 4 178.) But, as noted above, Plaintiff \u201ccannot allege that the failure to comply\nwith Item 1.01(a) is, standing alone, sufficient to state a claim under Section 10(b) and Rule 10b\u2014\n5.\u201d In re Bank of Ain. Corp. Sec., Deriv. & Emp. Ret. Income Sec. Act (ERISA) Litig., No. 09-\n2058, 2011 WL 3211472, at *10 (S.D.N.Y. July 29, 2011). Indeed, Plaintiff alleges only that Riot\nhad a duty to disclose such information under Item 1.01 (see TAC { 204), but failing to comply\nwith the requirements of the PSLRA by specifying the reasons Honig\u2019s identity was material to\ninvestors at the time. See Rahman y. Kid Brands, Inc., 736 F.3d 237, 243 Gd Cir. 2013) (An\nallegation of materiality is crucial because \u2018[t]he first requirement under the PSLRA obliges a\nplaintiff to specify . . . the reason or reasons why the statement is misleading\u201d), see also In re\nSanofi-Aventis Sec, Litig., 774 F. Supp. 2d 549, $65 n.15 (S.D.N.Y. 2011) (\u201cThe omission of facts\nthat may be material or significant by hindsight does not render their omission at a prior time\n\nmisleading.\u201d\u2019),\n\n21\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 22 of 27 PagelD: 10448\n\nc) Other Allegedly False or Misleading Statements\n\nPlaintiff alleges that various other statements made by Riot and O\u2019 Rourke via SEC filings\nand interviews with the media give rise to Section 10b-5 liability. However, Plaintiffs allegations\nare insufficient to deem such statements materially false or misleading.\n\nFirst, Plaintiff alleges that each of Riot\u2019s 2017 and 2018 Registration Statements (Form S-\n3) were materially false and misleading because they stated: (1) \u201cthere are currently no agreements,\natrangements, or understandings with respect to the sale of any of the shares\u201d (TAC { 182); (2)\n\u201c(t]he selling stockholders may not sell or otherwise dispose of any or all of the shares offered by\nthis prospectus\u201d (Ud. 4 183); and (3) \u201cthe selling stockholders may sell or otherwise dispose of\nsome, all or none of the shares covered hereby,\u201d Cd. | 184.) Plaintiff claims that O\u2019Rourke and\nBeeghley knew that Honig and others would sell \u201cat least some\u201d of their shares \u201cas part of their\nusual modus operandi\u201d Cd.) But, as the Court has already found, Plaintiff fails to sufficiently\nallege the existence of an agreement to sell Riot\u2019s shares or that Riot was aware of any such\nagreement.\n\nSecond, Plaintiff recycles allegations that Riot\u2019s January 5, 2018 and February 7, 2018\nForms S-3 were misleading because they stated: \u201c[nJone of the selling stockholders has held any\nposition or office, or has otherwise had a material relationship, with us or any of our subsidiaries\nwithin the past three years other than as a result of the ownership of our shares or other securities,\u201d\n(TAC \u00a7\u00a7 211-13.) The Court previously dismissed Plaintiff's claim in this regard. (See, e.g., ECF\nNo. 166 at 18.), Plaintiff now argues a new theory of falsity, asserting that \u201cHonig (and several\nother Selling Stockholders) did in fact have a material relationship with Riot by virtue of their\nundisclosed participation in three corporate transactions involving Riot\u2019\u2014namely, the Coinsquare\nAgreement, the Kairos Transaction, and the March 2017 Private Placement. (ECF No. 240 at 25-\n\n26.) Plaintiffs theory, however, seemingly denies the import of the phrase \u201cother than as a result\n\n22\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 23 of 27 PagelD: 10449\n\nof the ownership of our shares or other securities\u201d \u2014ownership that ultimately formed the basis for\nHonig\u2019s participation in the transactions.\n\nThird, Plaintiff points to purportedly false statements by O\u2019Rourke in a CNBC interview\non February 16, 2018 and in a letter to Riot shareholders that same day. (See TAC 4] 220, 222.)\nSpecifically, Plaintiff alleges that O\u2019Rourke falsely stated to CNBC that he was not \u201cworried about\nthe SEC because [Riot] overdisclose[s}\u201d (id. ] 220), and that O\u2019Rourke similarly misleadingly\nstated to Riot shareholders that Riot took its \u201cSEC reporting obligations seriously and diligently\nfile all reports[.]\u201d (/d. 222.) Nevertheless, the Court has previously dismissed similar allegations\nas \u201cvague and general statements of optimism\u201d that are immaterial and understood by reasonable\ninvestors as such. (See ECF No. 166 at 24-25 (collecting cases)), Moreover, \u201cthe general\nstatements about compliance at issue here are the kind of corporate puffery that are rarely (if ever)\nactionably misleading.\u201d Kang v. PayPal Holdings, Inc., 620 F. Supp. 3d 884, 898 (N.D. Cal.\n2022); see Crafimatic Sec. Litig. y. Krafisow, 890 F.2d 628, 642 Gd Cir. 1989) (holding that\n\u201cstatements of subjective analysis or extrapolation, such as opinions, motives, and intentions\u201d are\n\u201csoft information\u201d and thus immaterial for purposes of Rule 10b-5).\n\nFourth, Plaintiff alleges that, on or around February 16, 2016, Honig falsely stated in an\ninterview with CNBC that he no longer manipulated stocks in response to a question asking as\nmuch. (See TAC {f 131, 134. Again, as with the statements made by O\u2019Rourke, Honig\u2019s\nresponse to the interview question is easily dismissed as an immaterial statement about regulatory\ncompliance by a single shareholder. Moreover, Plaintiff fails to allege facts indicating that the\nstatement was false or misleading regarding Honig\u2019s activities at Riot when made.\n\nIn sum, the Court finds that Plaintiff cannot demonstrate the first element of a Rule 10b-\n\n5(b) claim. Since Plaintiff fails to adequately plead that any of the identified omissions or\n\n23\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 24 of 27 PagelD: 10450\n\nstatements are materially false or misleading, the Court does not reach whether Plaintiff has\nsufficiently pled scienter or loss causation, which are also vigorously challenged by Defendants.\n(See ECF No, 166 at 28 (collecting cases and declining to address the issues of scienter and loss\ncausation absent a materially false or misleading statement or omission).}) Accordingly, given\nPlaintiff's numerous attempts to state a claim, Plaintiffs Rule 10b-5(b) claim against Defendants,\n\nCount II in the TAC, is dismissed with prejudice.\n\n2. Rule 10b-5(a) and (ce) Liability\n\n\u201cTo state a claim based on conduct violating Rule 10b~5(a) and (c), a private plaintiff must\nallege (1) that the defendant committed a deceptive or manipulative act, (2) in furtherance of the\nalleged scheme to defraud, (3) with scienter, and (4) reliance.\u201d SEC vy, Lucent Techs., Inc., 610 F.\nSupp. 2d 342, 350 (D.N.J. 2009); see In re DVE, Inc. Sec. Litig., 639 F.3d 623, 643 (3d Cir, 2011)\n(\u201cWe refer to claims under Rule 10b-5{a) and (c) as \u2018scheme liability claims\u2019 because they make\ndeceptive conduct actionable, as opposed to Rule 10b-5(b), which relates to deceptive\nstatements.\u201d).\n\nMoving to dismiss Plaintiff's scheme liability claim, Defendants argue that Plaintiff merely\nrepackages the statements or omissions that form the basis for the Rule 10b-5(b) claims. (See ECF\nNo. 232-1 at 45.) As an initial matter, the Court has found those allegations unactionable under\nRule 10b-5(b), see supra, and thus such statements or omissions cannot independently serve as\n\u201cdeceptive or manipulative\u201d acts to support scheme lability under Rule 10b-5. (See ECF No. 166\nat 31 n.17 (same).) Further, \u201c[w]here the primary purpose and effect of a purported scheme is to\nmake a public misrepresentation or omission, courts have routinely rejected the [plaintiff's] attempt\nto bypass the elements necessary to impose \u2018misstatement\u2019 liability under subsection (b) by\n\nlabeling the alleged misconduct a \u2018scheme\u2019 rather than a \u2018misstatement.\u2019\u201d Jn re Mindbody, Inc.\ng g }\n\n24\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 25 of 27 PagelD: 10451\n\nSec. Litig., 489 F, Supp. 3d 188, 216 (S.D.N.Y. 2020) (quoting SEC y, Kelly, 817 F. Supp. 2d 340,\n343 (S.D.N.Y. 2011). Without more, Plaintiffs allegations that Riot, O\u2019Rourke, or Beeghley\nfailed to disclose Honig\u2019s role in the alleged related-party transactions and the existence of a\nSection 13(d) group are insufficient to demonstrate a deceptive or manipulative act that might give\nrise to scheme liability. Accordingly, Plaintiff's scheme liability claim as to Riot, O\u2019Rourke, and\nBeeghley is dismissed with prejudice.\n\nHonig separately moves to dismiss Plaintiffs scheme liability claim (See ECF No. 234-1\nat 17-31; ECF No. 242 at 5-13.) Honig argues that the Court has twice dismissed Plaintiff's scheme\nliability claim against him and that Plaintiff's TAC does nothing to rectify the deficiencies\nidentified in the Court\u2019s prior opinions. (See ECF No. 234-1 at 7-10.) In its April 30, 2020\nOpinion, the Court found that Plaintiff failed to adequately plead loss causation with respect to\nHonig\u2019s concealment of his ownership and sales of Riot stock in violation of Section 13(d) of the\nExchange Act and Rule 13d-2. (See ECF No. 166 at 39.) Subsequently, in its April 8, 2022\nOpinion, the Court held that a \u201cSection 13(d) violation may not give rise to a private right of action\nfor damages under Section 10(b)\u201d and that, when \u201ca duty arises\u201d under Section 13(d), \u201cthe proper\nrelief should relate to the information that was misstated or omitted.\u201d (ECF No. 223 at 20.)\n\nDespite the Court\u2019s latter ruling, Plaintiff\u2019s scheme liability claim against Honig continues\nto rely on Honig\u2019s failure to promptly file public reports with the SEC that are required by Section\n13(d) and Rule 13d-2. (See ECF No. 241 at 15; TAC \u00a7f 142-47.) Further, in support of the claim,\nPlaintiff rehashes legal arguments that have been previously considered and expressly rejected by\nthe Court. (See ECF No, 241 at 22-24.) The Court declines Plaintiff's invitation to belatedly\n\nreconsider its prior legal conclusions.!' See U.S. ex rel. Silver vy. Omnicare, Inc., No. 11-1326,\n\n'! On August 2, 2023, Plaintiff submitted a notice of supplemental authority, alerting the Court to\narecent district court opinion\u2014Z/n re Bed Bath & Beyond Corp. Sec. Litig., No. 22-2541, 2023 WL\n\n25\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 26 of 27 PagelD: 10452\n\n2020 WL 7022664, at *3 (D.N.J. Nov. 30, 2020) (stating that \u201c[t]he doctrine of the law of the case\nprecludes review of legal issues previously decided\u201d and \u201c[t]he previous disposition of a motion\nto dismiss may constitute the law of the case\u201d) (citing fn re City of Phila. Litig., 158 F.3d 711,\n717-18 (3d Cir. 1998)). Because Plaintiff's scheme liability claim against Honig is premised on\nconduct and a legal theory that the Court has already ruled unactionable, Plaintiff's Rule 10b-5,\nsubsections (a) and (c), claim against Honig is dismissed with prejudice,\n\nB. Section 20(a) Control Person Liability (Count ID\n\nCount IH of the TAC asserts liability pursuant to Section 20(a) of the Exchange Act against\nO\u2019Rourke, Beeghley, and Honig, (See TAC J\u00a7 278-81.) Under Section 20(a) of the Exchange\nAct, \u201c[o]ne can be liable .. . for controlling a company that committed securities fraud.\u201d Jones v.\nIntelli-Check, Inc., 274 F. Supp. 2d 615, 644 (D.N.J. 2003). To state a claim, the plaintiff must\nshow: \u201c(1) an underlying violation by the company; and (2) circumstances establishing defendant\u2019s\ncontrol over the company\u2019s actions.\u201d Jd. at 645,\n\nBecause Plaintiff has not adequately alleged claims against Riot under Section 10(b),\nPlaintiff's Section 20(a) cause of action necessarily fails. Accordingly, Plaintiffs Section 20(a)\n\nclaim against O\u2019Rourke, Beeghley, and Honig is dismissed with prejudice.\n\n4824734 (D.D.C. July 27, 2023)}\u2014holding that the filing of a misleading Schedule 13D by an\nindividual investor accused of a pump-and-dump scheme can serve as a basis for a Section 10(b}\nclaim. (See ECF No. 249.) Having considered Plaintiff's submission, the Court finds no basis to\ndepart from its prior conclusion that a Section 13(d) violation does not give rise to a private right\nof action for damages under Section 10(b). (See generally ECF No, 166.) The district court in\nBed Bath & Beyond never reaches the question of whether damages are available as a remedy\nwhen Section 10(b) liability arises from a Section 13(d) violation, noting only that such a\ndetermination amounts to a \u201cseparate question.\u201d 2023 WL 4824734, at *7. In contrast, the Court\nextensively considered that question under controlling precedent in its April 8, 2022 Opinion, (see\nECF No. 223 at 20-21), and declines to disturb that analysis based on an out-of-circuit opinion\naddressing a tangential legal issue.\n\n26\n\n\fCase 3:18-cv-02293-GC-RLS Document 251 Filed 08/25/23 Page 27 of 27 PagelD: 10453\n\nIV. CONCLUSION\n\nFor the foregoing reasons, Defendants\u2019 motions to dismiss are GRANTED; Plaintiffs\n\nclaims are DISMISSED with prejudice, An appropriate Order will follow.\n\nDate: August AB 2023 Chane\nGEORGETTE CASTNER\n\nUNITED STATES DISTRICT JUDGE\n\n27\n\n","ocr_status":1,"date_upload":"2023-09-17T20:08:15.309263-07:00","document_number":"251","attachment_number":null,"pacer_doc_id":"119020248677","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Opinion","acms_document_guid":""}],"date_created":"2023-08-25T08:39:49.924102-07:00","date_modified":"2026-06-16T08:51:14.992157-07:00","date_filed":"2023-08-25","time_filed":"11:14:26","entry_number":251,"recap_sequence_number":"2023-08-25.001","pacer_sequence_number":908,"description":"OPINION filed. Signed by Judge Georgette Castner on 8/25/2023. (mlh) (Entered: 08/25/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/362991670/","id":362991670,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/369701010/","id":369701010,"tags":[],"absolute_url":"/docket/6313843/252/takata-v-riot-blockchain-inc/","date_created":"2023-08-25T08:39:47.784882-07:00","date_modified":"2026-06-16T08:51:15.066811-07:00","sha1":"34a465b227f548172811442d534509cef0e6fa47","page_count":1,"file_size":42339,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.252.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.252.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 252 Filed 08/25/23 Page 1 of 1 PagelD: 10454\n\nUNITED STATES DISTRICT COURT\nDISTRICT OF NEW JERSEY\n\nCREIGHTON TAKATA, Individually and\non behalf of all others similarly situated,\n\nPlaintiff,\nv.\nRIOT BLOCKCHAIN, INC.,, ef a,\n\nDefendants,\n\nCivil Action No. 18-2293 (GC) (RLS)\n\nORDER\n\nTHIS MATTER is before the Court on three motions to dismiss the Third Amended\n\nComplaint of court-appointed lead plaintiff, Dr. Stanley Golovac (\u201cPlaintiff\u201d). The three motions\n\nwere respectively filed by defendants: (i) Riot Blockchain, Inc, (ECF No. 232); (ii) John O\u2019 Rourke\n\nand Michael Beeghley (ECF No. 233); and (iii) Barry Honig (ECF No. 234) (collectively,\n\n\u2018Defendants\u201d). Plaintiff opposed the motions. The Court has carefully considered the parties\u2019\n\nsubmissions without oral argument pursuant to Fed. R. Civ. P. 78 and Local Civil Rule 78.1. For\n\nthe reasons set forth in the Opinion filed on this date, and for good cause shown,\n\nET IS on nisoo tty of August 2023,\n\nORDERED that Defendants\u2019 motions to dismiss (ECF Nos. 232, 233, 234) are\n\nGRANTED, Plaintiff\u2019s claims are DISMISSED with prejudice; and it is\n\nFURTHER ORDERED that the Clerk of the Court mark this matter as closed on ihe\n\nCourt\u2019s docket.\n\nChater\n\nGrorCETTE CASTNER\nUNITED STATES DISTRICT JUDGE\n\n","ocr_status":1,"date_upload":"2023-09-17T20:08:20.110316-07:00","document_number":"252","attachment_number":null,"pacer_doc_id":"119020248759","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order on Motion to Dismiss","acms_document_guid":""}],"date_created":"2023-08-25T08:39:47.774274-07:00","date_modified":"2026-06-16T08:51:15.049117-07:00","date_filed":"2023-08-25","time_filed":"11:20:09","entry_number":252,"recap_sequence_number":"2023-08-25.002","pacer_sequence_number":910,"description":"ORDER granting 232 Motion to Dismiss, 233 Motion to Dismiss, and 234 Motion to Dismiss with prejudice. It is FURTHER ORDERED that the Clerk of the Court mark this matter as closed on the Court's docket. ***CIVIL CASE TERMINATED. Signed by Judge Georgette Castner on 8/25/2023. (mlh) (Entered: 08/25/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/361208030/","id":361208030,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/367841367/","id":367841367,"tags":[],"absolute_url":"/docket/6313843/250/takata-v-riot-blockchain-inc/","date_created":"2023-08-07T18:02:40.500575-07:00","date_modified":"2026-06-16T08:51:14.952761-07:00","sha1":"95ca167cc765a01e05dd6ae1aeed236aee58608f","page_count":2,"file_size":214046,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.250.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.250.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 250 Filed 08/07/23 Page 1 of 2 PageID: 10425\n\n\n\n\n 1(212) 318-6797\n chadpeterman@paulhastings.com\n\n August 7, 2023\n\n VIA ECF\n\n Honorable Georgette Castner, U.S.D.J.\n United States District Court, District of New Jersey\n Clarkson S. Fisher Federal Building & United State Courthouse\n 402 East State Street\n Trenton, NJ 08608\n\n Re: Takata v. Riot Blockchain, Inc., et al.,\n Civil No. 3:18-CV-02293 (GC) (RLS)\n\n Dear Judge Castner:\n\n I write on behalf of defendants Riot Blockchain, Inc. (\u201cRiot\u201d), John O\u2019Rourke, and\n Michael Beeghley (collectively, the \u201cRiot Defendants\u201d) in response to lead plaintiff Dr. Stanley\n Golovac\u2019s (\u201cPlaintiff\u201d) August 2, 2023 letter to this Court. (Dkt. No. 249.) Plaintiff offers\n supplemental authority in connection with Defendants\u2019 motions to dismiss, see In re Bed Bath &\n Beyond Corp. Securities Litigation, Case No. 1:22-cv-2541 (TNM), 2023 WL 4824734 (D.D.C.\n July 27, 2023), which is neither \u201cpertinent\u201d nor \u201csignificant.\u201d In fact, the supplemental authority\n undermines Plaintiff\u2019s allegations that the Riot Defendants violated the federal securities laws.\n\n In Bed Bath & Beyond, the court considered whether a plaintiff could maintain a claim\n under Section 10(b) of the Securities Exchange Act of 1934 (\u201cExchange Act\u201d) against an\n investor in Bed Bath & Beyond, based on allegations that the investor violated disclosure\n requirements under Section 13(d) of the Exchange Act. The Court permitted the claims against\n the investor to go forward. But, the court dismissed the Section 10(b) and 20(a) claims against\n Bed Bath & Beyond\u2019s CEO, Sue Gove, and held that the company did not commit a violation of\n Section 10(b). 1 Similarly, in this case, Plaintiff has not and cannot allege that Riot or its former\n executives were under a duty to satisfy the disclosure requirements under Section 13(d). As\n such, Bed Bath & Beyond is not pertinent to assessing the allegations against the Riot\n Defendants.\n\n\n\n 1\n Because Bed Bath & Beyond filed for bankruptcy, the court stayed the claims against the\n entity. Bed Bath & Beyond, 2023 WL 4824734, *3. Nevertheless, the court held that Bed Bath\n & Beyond did not violate Section 10(b) for purposes of determining whether Ms. Gove violated\n Section 20(a). Id. at *3-8.\n\fCase 3:18-cv-02293-GC-RLS Document 250 Filed 08/07/23 Page 2 of 2 PageID: 10426\n\n\n\n\n Honorable Georgette Castner, U.S.D.J.\n August 7, 2023\n Page 2\n\n And even if the supplemental authority were pertinent, it is certainly not significant.\n Setting aside that Bed Bath & Beyond is an out-of-circuit opinion that ignores Third Circuit\n precedent, the district court never reaches the question this Court previously considered in its\n April 8, 2022 detailed order: whether damages are available as a remedy \u201cwhen liability for\n Section 10(b) arises from a Section 13(d) violation.\u201d Takata v. Riot Blockchain, Inc., No. 18-\n 02293 (ZNQ) (TJB), 2022 WL 1058389, *5 (D.N.J. Apr. 8, 2022). Instead, the Bed Bath &\n Beyond court only notes that determining whether damages are available as a remedy is a\n \u201cseparate question.\u201d Bed Bath & Beyond, 2023 WL 4824734, *7 (D.D.C. July 27, 2023). In\n contrast, this Court extensively considered the existence of a private right of action for damages\n based on Section 13(d) by applying controlling case law. (See Dkt. No. 223 (Takata v. Riot\n Blockchain, Inc., 2022 WL 1058389, *10 (D.N.J. Apr. 8, 2022) (\u201cAs stated above, courts have\n consistently held that implied private rights under Section 13(d) may provide plaintiffs injunctive\n relief but not monetary damages; to allow Plaintiff to sidestep the boundaries of even the implied\n right of action by pleading Section 10(b) seems improper.\u201d).) Bed Bath & Beyond therefore\n offers no meaningful analysis on the primary issue briefed by the parties in this action.\n\n In short, the Riot Defendants submit that the Bed Bath & Beyond court\u2019s legal analysis\n does nothing to support viable claims against them. Accordingly, the Court should deny\n Plaintiff\u2019s application of the proffered supplemental authority.\n\n\n Respectfully submitted,\n\n /s/Chad J. Peterman\n\n Chad J. Peterman\n of PAUL HASTINGS LLP\n\n\n CJP:lv\n\n\n cc: All Counsel (Via ECF)\n\f","ocr_status":2,"date_upload":"2023-09-17T20:07:52.376187-07:00","document_number":"250","attachment_number":null,"pacer_doc_id":"119020145422","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2023-08-07T18:02:40.490441-07:00","date_modified":"2026-06-16T08:51:14.930673-07:00","date_filed":"2023-08-07","time_filed":"20:42:56","entry_number":250,"recap_sequence_number":"2023-08-07.001","pacer_sequence_number":905,"description":"Letter from Chad Peterman to the Hon. Georgette Castner, U.S.D.J in Response to Letter from Joseph J. DePalma re 249 Letter. (PETERMAN, CHAD) (Entered: 08/07/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/360496294/","id":360496294,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/367106280/","id":367106280,"tags":[],"absolute_url":"/docket/6313843/249/takata-v-riot-blockchain-inc/","date_created":"2023-08-02T09:42:22.260335-07:00","date_modified":"2026-06-16T08:51:14.900915-07:00","sha1":"ad595bc2cb538daad1ebdc22990b1754a86cb43e","page_count":15,"file_size":612911,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.249.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.249.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 1 of 15 PageID: 10410\n\n\n\n\n August 2, 2023\n\n\n VIA ECF\n Honorable Georgette Castner, U.S.D.J.\n United States District Court, District of New Jersey\n Clarkson S. Fisher Federal Building & United States Courthouse\n 402 East State Street\n Trenton, NJ 08608\n\n Re: Takata v. Riot Blockchain, Inc., et al.,\n Civil No. 3:18-CV-02293(GC)(RLS)\n\n Dear Judge Castner:\n I write on behalf of Court-appointed Lead Plaintiff Dr. Stanley Golovac (\u201cPlaintiff\u201d) to\n request permission to apprise the Court of pertinent and significant supplemental authority issued\n since the completion of briefing on Defendants\u2019 Motion to Dismiss the Consolidated Third\n Amended Class Action Complaint for Violations of the Federal Securities Laws (ECF Nos. 232-\n 34, 239-41, 242-46). 1\n On July 27, 2023, the district court in In re Bed Bath & Beyond Corp. Securities Litigation,\n Case No. 1:22-cv-2541 (TNM), 2023 WL 4824734 (D.D.C. July 27, 2023) (attached as Exhibit\n A), issued an opinion on a motion to dismiss holding that the plaintiff could bring a claim under\n Section 10(b) of the Securities Exchange Act of 1934 based on the filing of a misleading Schedule\n 13D by an individual, Ryan Cohen (\u201cCohen\u201d), who engaged in an alleged pump-and-dump\n scheme. In so ruling, the district court held:\n\n \u2022 \u201cTo start, [Cohen] claims that [plaintiff] cannot bring a 10(b) claim based on a misleading\n statement in a 13D. . . . Not so. As the Supreme Court has directed, when determining\n \u2018the scope of conduct prohibited by \u00a7 10(b), the text of the statute controls.\u2019 And Cohen\n points to nothing in 10(b)\u2019s text to support a carveout for misleading 13Ds.\u201d Id. at *7\n (citing Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164,\n 173 (1994)).\n \u2022 \u201cCohen first argues that \u2018[n]o private right of action for damages exists under Section\n\n 1\n See, e.g., Harper v. Amazon.com Servs. Inc., No. CV 19-21735 (FLW), 2020 WL 4333791, at *6\n (D.N.J. July 28, 2020) (considering judicial opinion referenced in \u201cletter of supplemental\n authority\u201d); Ocasio v. CoreLogic Credco, LLC, No. CV 14-1585 (NLH/JS), 2015 WL 5722828,\n at *5 (D.N.J. Sept. 29, 2015) (granting defendant \u201cleave to supplement its briefing with . . .\n supplemental authority\u201d).\n\n\n 960857.1\n\fCase 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 2 of 15 PageID: 10411\n\n\n\n\n Honorable Georgette Castner, U.S.D.J.\n August 2, 2023\n Page 2\n\n 13(d).\u2019 . . . No matter. Even if that is right, it does not follow that 10(b) claims may not\n be based on misleading 13D filings. . . . Those are two separate questions.\u201d Id. (alteration\n in original).\n\n \u2022 \u201cBut those generic warnings that [Cohen] \u2018may endeavor to increase or decrease [his]\n position,\u2019 are different than his alleged concrete plan to dump $100 million in stock, a plan\n that Cohen failed to disclose. . . . Once that plan crystallized, he had a duty to report it.\n And this case may show why; his failure to report the plan allegedly misled investors. So\n [plaintiff]\u2019s 13D theory may proceed.\u201d Id. at *8.\n\n \u2022 The plaintiff had actively pleaded a scheme liability claim under SEC Rules 10b-5(a) and\n (c), holding that plaintiff \u201chas alleged a pump and dump scheme that relies on more than\n just misrepresentations or omissions. For instance, it claims that Cohen delayed filing two\n SEC forms \u2018to stimulate demand in Bed Bath\u2019s securities knowing that the mere act of\n filing these documents\u2019 would spur trading and thus pump Bed Bath\u2019s stock price. . . . And\n [plaintiff] also claims that Cohen slow-walked his Form 144 and then filed it in a way\n \u2018designed to ensure that its release would be delayed.\u2019\u201d Id. at *12.\n\n The claims in Bed Bath & Beyond against Cohen mirror the claims asserted by Plaintiff in\n this case. See, e.g., Consolidated Third Amended Class Action Complaint for Violations of the\n Federal Securities Laws (ECF No. 231) at \u00b6 143 (alleging scheme liability based on failure \u201cto\n promptly file public reports with the SEC that are required by Section 13(d) of the Exchange Act\n and Rule 13d-2. These reports would have alerted Riot\u2019s public investors that a large shareholder\n of the Company was aggressively selling his shares.\u201d); \u00b6 146 (\u201cHonig\u2019s stock sales and failure to\n file Schedules 13D and 13D/A were deceptive acts under Section 10(b) and Rule 10b-5 (a) and (c)\n of the federal securities laws.\u201d). Given the similarity in allegations, Plaintiff respectfully submits\n that the Bed Bath & Beyond court\u2019s legal analysis is persuasive.\n\n Respectfully submitted,\n /s/ Joseph J. DePalma\n Joseph J. DePalma\n JJD:cd\n cc: All Counsel (Via ECF)\n\n\n\n\n 960857.1\n\fCase 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 3 of 15 PageID: 10412\n\n\n\n\n EXHIBIT A\n\f Case 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 4 of 15 PageID: 10413\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\n\n \u201conline\u201d retail investors. See id. \u00b6 53. Those meme stock\n 2023 WL 4824734 investors gather on Twitter and Reddit, often using\n Only the Westlaw citation is currently available. memes and emojis to discuss their trades (thus the name\n United States District Court, District of Columbia. \u201cmeme stock\u201d). See id. \u00b6\u00b6 4, 46\u201351. And they often battle\n \u201cinstitutional investors who were shorting ... meme\n IN RE BED BATH & BEYOND CORPORATION stocks,\u201d coordinating to try to short squeeze them. Id. \u00b6\n SECURITIES LITIGATION, 50.\n\n Case No. 1:22-cv-2541 (TNM) A short squeeze happens when many investors bet that a\n | stock\u2019s price will fall and instead the price rises. That\n Signed July 27, 2023 \u201csqueezes\u201d those betting against the stock who then try to\n cut their losses by buying shares of the rising stock, and\n that drives the price even higher. See id. \u00b6 26.\n\n Cohen entered the fray in 2020 by buying a large stake in\n GameStop. See id. \u00b6 53. After buying that stake, he made\n public business recommendations and selected several\n directors for its board. See id. \u00b6\u00b6 55\u201356, 64. The company\n had already been a hit with meme stock investors. See id.\n MEMORANDUM OPINION \u00b6 59. But when they found out about Cohen\u2019s purchase,\n the company\u2019s stock price rose by over 40%. See id. \u00b6 53.\n Cohen played into that online energy, interacting with his\nTREVOR N. McFADDEN, UNITED STATES hundreds of thousands of followers on Twitter. See, e.g.,\nDISTRICT JUDGE id., \u00b6\u00b6 8, 73\u201377, 83. And he \u201cquickly [became] the leader\n of\u201d meme stock investors. Id. \u00b6 60.\n*1 Ryan Cohen is an entrepreneur-turned-investor. A few\nyears back, he bought a 10% stake in Bed Bath & Cohen used the same playbook with Bed Bath & Beyond.\nBeyond. Using his cachet with small-time investors, he A year ago, he bought a 9% stake, and with this leverage\nsent the stock price soaring through a series of tweets and he made public business recommendations and picked\nregulatory filings. But those so-called meme stock several members for its board of directors. See id. \u00b6\u00b6\ninvestors had flown too close to the sun. Once news broke 92\u2013101. As with GameStop, Bed Bath\u2019s stock price\nthat Cohen had sold his entire stake, the stock plummeted. soared. See id. \u00b6 97. And it too became a meme stock. See\nAnd when the dust settled investors were out millions. id. \u00b6\u00b6 96\u201397.\n\nSo one of them filed this securities class action against Still, Bed Bath faced serious financial headwinds. For\nCohen, his company, Bed Bath, and its CEO. All four several years in a row, the company had been\nnow move to dismiss. Most of the claims against Cohen hemorrhaging money. See id. \u00b6\u00b6 86\u201391. To raise more,\nwill survive. The investor has adequately alleged that Cohen wanted Bed Bath to sell off its subsidiary store,\nCohen and his company misled investors and traded on buybuy BABY, which sells items for babies and children.\ninside information. But the claims against Bed Bath\u2019s See id. \u00b6 95.\nCEO must be dismissed; she did no such thing. Finally,\nbecause Bed Bath has since declared bankruptcy, the *2 But August 2022 brought more bad news for Cohen.\nCourt must stay the claims against it for now. Though Bed Bath flirted with Cohen\u2019s proposal, its\n leadership did not acquiesce. Rather than selling buybuy\n BABY, Bed Bath used it as collateral to borrow money.\n See id. \u00b6\u00b6 119\u201335. When that credit agreement was\n finalized in late August 2022, Cohen\u2019s suggestion was\n I. dead in the water. See id.\nRyan Cohen built an online pet store and sold it for over And there was more bad news. Around the same time,\n$3 billion.1 See Sec. Am. Compl. (Compl.) \u00b6\u00b6 41\u201343. Bed Bath announced that it was firing 20% of its\nUsing that big score, he turned to investing. At first, he workforce and closing 150 stores. Id. \u00b6 199. And just one\nbought \u201cmainstream\u201d stocks. Id. \u00b6 45. But he eventually day later, Bed Bath\u2019s investment rating was downgraded.\nturned to \u201cmeme stocks,\u201d stocks popular with certain\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 1\n\f Case 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 5 of 15 PageID: 10414\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\nId. \u00b6 200. Many investors lost a lot of money.\n\nBut before all that became public, Cohen hatched a plan One such investor, Bratya SPRL, sued. It alleges that this\nto escape with a profit before the stock price tanked. See was a pump-and dump-scheme. See id. \u00b6\u00b6 7\u20138. That\nid. \u00b6 138. Starting in early August, Cohen made a series of happened in two steps. Cohen first drove up the price,\nmoves designed to increase the stock price so that he using his influence to mislead investors into buying or\ncould sell high. He fanned the meme stock flames. holding Bed Bath stock. Then, once his fans drove the\n price up, he sold, leaving them holding the bag. See id. \u00b6\u00b6\nFirst, Cohen tweeted. On August 12, 2022, CNBC 31\u201333 (describing such schemes).\ntweeted a negative story about Bed Bath, accompanied by\na picture of a woman pushing a shopping cart. Cohen Bratya claims that Cohen; his company, RC Ventures;\nfired back: Bed Bath; and its CEO, Sue Gove, all violated various\n securities laws. All four Defendants move to dismiss.\n\n\nTabular or graphic material set at this point is not\ndisplayable.\n II.\nId. \u00b6 147. Some online communities understand the\nsmiley moon emoji to mean \u201cto the moon\u201d or \u201ctake it to *3 To survive a motion to dismiss under Rule 12(b)(6),\nthe moon.\u201d See id. \u00b6\u00b6 148\u201355. In other words, according Bratya must \u201cstate a claim to relief that is plausible on its\nto Plaintiff, Cohen was telling his hundreds of thousands face.\u201d Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)\nof followers that Bed Bath\u2019s stock was going up and that (cleaned up). So Bratya must plead facts \u201cthat allow[ ] the\nthey should buy or hold. They did so, sending the price court to draw the reasonable inference that the defendant\nsoaring. See id. \u00b6\u00b6 4, 153, 156. is liable.\u201d Id. The Court treats the Complaint\u2019s factual\nFour days later, Cohen filed a document with the SEC allegations as true and reads inferences in Bratya\u2019s favor.\nstating that he had not recently sold any stock\u2014called a See Tillerson, 865 F.3d at 649.\n13D. See id. \u00b6 159. If he had any concrete plans to sell, he\nneeded to disclose that in the form. But Cohen mentioned Bratya\u2019s securities fraud claims must also survive the\nno such plans. So some investors read this as Cohen\u2019s heightened requirements of Rule 9(b) and the Private\ncontinued enthusiasm for Bed Bath. See id. \u00b6 162. And Securities Litigation Reform Act. To satisfy Rule 9(b),\nagain, the stock price went up. See id. \u00b6\u00b6 163\u201364. Bratya must \u201cstate with particularity the circumstances\n constituting fraud.\u201d Fed. R. Civ. P. 9(b). And to satisfy\nFinally, later that same day Cohen filed a Form 144, the Reform Act, Bratya must \u201cspecify each statement\nwhich outlined his potential plan to sell stock. See id. \u00b6 alleged to have been misleading, [and] the reason or\n169. The stock price held. See id. \u00b6 175. reasons why the statement is misleading.\u201d 15 U.S.C. \u00a7\n 78u\u20134(b)(1). If Bratya\u2019s claims are \u201cmade on information\nShortly after Cohen submitted that Form 144, Bed Bath and belief, [Bratya must] state with particularity all facts\nreceived media questions about it. See id. \u00b6\u00b6 179\u201380. on which that belief is formed.\u201d Id. Plus, when alleging a\nPresumably, reporters wanted to know if Cohen had defendant\u2019s mental state, Bratya must \u201cstate with\nsoured on Bed Bath. In a published statement, Bed Bath particularity facts giving rise to a strong inference that the\ntold investors that it was \u201cpleased to have reached a defendant acted with the required state of mind.\u201d Id. \u00a7\nconstructive agreement with RC Ventures in March.\u201d Id. 78u\u20134(b)(2)(A).\nAnd it offered some other corporate platitudes. Id.\n(discussing \u201cexecut[ing] on priorities\u201d and \u201cworking\nexpeditiously\u201d).\n\nMeanwhile, on August 16 and 17, Cohen quietly sold his III.\nentire stake in Bed Bath. See id. \u00b6 165\u201368. He made out\n Start with Bratya\u2019s claims against Bed Bath and its CEO,\nhandsomely, profiting $68 million. See id. \u00b6 168.\n Sue Gove. Bed Bath has declared bankruptcy, so the case\n against it is automatically stayed. See 11 U.S.C. \u00a7\nOnce news finally broke that Cohen had sold, Bed Bath\u2019s\n 362(a)(1)\u2013(3). And Bratya has stated no claim against Sue\nstock plunged. Id. \u00b6 178. After closing at over $20 on\n Gove, so the Court will grant her motion to dismiss.\nAugust 16 and $23 on August 17, the stock plummeted to\nunder $9 within the next few days. Id. \u00b6\u00b6 164, 166, 178.\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 2\n\f Case 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 6 of 15 PageID: 10415\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\nBratya\u2019s main claim against Bed Bath and Gove is that Grp., Inc. v. First Derivative Traders, 564 U.S. 135, 142\nthey violated \u201cSection 10(b) of the Exchange Act and (2011) (clarifying who counts as the \u201cmaker of a\n[SEC] Rule 10b\u20135(b).\u201d Compl. \u00b6 228. Those laws statement\u201d). And the Court analyzes Bratya\u2019s claim\n\u201cprohibit making any material misstatement or omission against both Gove and Bed Bath because Bratya\u2019s 20(b)\nin connection with the purchase or sale of any security.\u201d claim, which will be discussed later, hinges on whether\nHalliburton Co. v. Erica P. John Fund, Inc., 573 U.S. this 10(b) claim survives. Ultimately, the Court agrees\n258, 267 (2014). To make out a Section 10(b) and Rule with Gove that Bratya has stated no claim.\n10b\u20135 claim, Bratya must plausibly allege: \u201c(1) a material\nmisrepresentation or omission by the defendant; (2) *4 First, the statement was not false, misleading, or\nscienter; (3) a connection between the misrepresentation actionable. Bed Bath had \u201creached a constructive\nor omission and the purchase or sale of a security; (4) agreement with RC Ventures in March.\u201d Compl. \u00b6 180.\nreliance upon the misrepresentation or omission; (5) As Bratya says in its Complaint, Bed Bath\u2019s \u201cCooperation\neconomic loss; and (6) loss causation.\u201d Id. (cleaned up). Agreement [with Cohen and RC Ventures] allowed\n Cohen to obtain three new seats on the Board, and\nBratya says that Bed Bath and Gove violated those outsized influence over a new Board Strategy Committee\nprovisions when it gave the following statement on charged with evaluating options for buybuy BABY\u2019s\nAugust 17, 2022: future.\u201d Id. \u00b6 5. So that part of the statement was true.\n\n Nor was that part of Bed Bath\u2019s statement misleading.\n That is, it would not \u201cmislead a reasonable investor\n We were pleased to have reached a regarding the nature of the securities offered.\u201d In re XM\n constructive agreement with RC Satellite Radio Holdings Sec. Litig., 479 F. Supp. 2d 165,\n Ventures in March and are 178 (D.D.C. 2007) (cleaned up). Bratya argues that \u201c[t]he\n committed to maximizing value for reference to a \u2018constructive agreement\u2019 signaled the exact\n all shareholders. We are continuing opposite of the actual broken relationship at the time of\n to execute on our priorities to the statement.\u201d Opp\u2019n at 52, ECF No. 79. But the\n enhance liquidity, make strategic statement specifically says that the constructive\n changes and improve operations to agreement was from five months earlier. No reasonable\n win back customers, and drive cost investor would assume that meant Bed Bath and Cohen\n efficiencies; all to restore our remained in lock step.\n company to its heritage as the best\n destination for the home, for all Indeed, the much more plausible takeaway is that Bed\n stakeholders. Specifically, we have Bath and Cohen were on the outs. Imagine this: You ask a\n been working expeditiously over coworker how he is getting along with a friend and he\n the past several weeks with responds, \u201cwe had a solid relationship last year.\u201d Would\n external financial advisors and you assume that they are close now? Of course not. You\n lenders on strengthening our would assume the opposite. Dated praise implies current\n balance sheet, and the Company disgruntlement.\n will provide more information in an\n update at the end of this month. More, the rest of the statement is mere puffery, a\n \u201cgeneralized statement[ ] of optimism.\u201d In re Harman\n Int\u2019l Indus., Inc. Sec. Litig., 791 F.3d 90, 109 (D.C. Cir.\nCompl. \u00b6 180. 2015) (cleaned up). And puffery is not actionable. See id.\n\nIn Bratya\u2019s view, this statement was misleading because Second, even if the statement were a material\nBed Bath and Gove failed \u201cto disclose that Cohen and RC misrepresentation or omission, Bratya fails to plead\nVentures had already formed a plan to liquidate all their scienter. In plain English, that means a \u201cdefendant\u2019s\nholdings\u201d at that time. Id. \u00b6 182. And Bed Bath\u2019s intention to deceive, manipulate, or defraud.\u201d Tellabs, Inc.\n\u201crelationship with Cohen was no longer \u2018constructive\u2019 \u201d v. Makor Issues & Rts., Ltd., 551 U.S. 308, 313 (2007)\nbecause it had rejected Cohen\u2019s proposed \u201cstrategic plan.\u201d (cleaned up). To satisfy that element, Bratya\u2019s Complaint\nId. must give a \u201cstrong inference\u201d of scienter. 15 U.S.C. \u00a7\n 78u\u20134(b)(2)(A). And to figure out if Bratya adequately\nThe Court assumes, without deciding, that Gove can be alleged scienter, the Court must \u201cconsider plausible,\nheld responsible for Bed Bath\u2019s statement. See Janus Cap. nonculpable explanations for [Gove\u2019s] conduct, as well as\n\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 3\n\f Case 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 7 of 15 PageID: 10416\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\ninferences favoring\u201d Bratya. Tellabs, 551 U.S. at 324. In survive because it \u201cadequately pleads claims under\nthe end, Bratya\u2019s claim survives \u201conly if a reasonable Section 10(b) of the Exchange Act\u201d). And thus the Court\nperson would deem the inference of scienter cogent and at will dismiss this claim too.2\nleast as compelling as any\u201d innocent one. Id.\n\nHere, Bratya says that Gove and Bed Bath \u201ceither (i)\nknew that Cohen and RC Ventures formed a plan to sell,\nand had sold much if not all of, his holdings; or (ii) IV.\nrecklessly disregarded the risk of misleading investors\nabout Cohen\u2019s plan to sell.\u201d Opp\u2019n at 52. Bratya claims Turn next to the claims against Cohen.3 Most will survive.\nBed Bath and Gove should have checked whether Cohen\nhad sold shares before saying anything positive about its\npast relationship with him. In Bratya\u2019s words, that \u201cis not\ntantamount to a duty to monitor Cohen,\u201d but it rather A.\nmerely \u201crequires that [Gove and Bed Bath], like any\nspeaker, not make factual misrepresentations without Consider first Count I, Bratya\u2019s misrepresentation or\nverification.\u201d Opp\u2019n at 55. omission claim. See Compl. \u00b6\u00b6 219\u201329. Cohen asks the\n Court to dismiss this claim, arguing that Bratya\nBut again, Gove and Bed Bath never lied. Nor were they inadequately pled a few elements. The Court disagrees.\nreckless to mention an old agreement in a generic\ncorporate statement without first checking to make sure\nthat the party to that old agreement still held stock in the\ncompany. True, in \u201ccertain circumstances,\u201d courts have\nfound recklessness \u201cwhere plaintiffs alleged facts 1.\ndemonstrating that defendants failed to review or check\ninformation that they had a duty to monitor.\u201d Novak v. Cohen first claims that all three statements are not\nKasaks, 216 F.3d 300, 308\u201309 (2d Cir. 2000). But those material misrepresentations or omissions. But each is\ncases involve explicit reassurances or clear lies. See id. plausibly material and misleading.\n(citing examples). This case is a bridge too far.\n 1. Cohen\u2019s Tweet. The moon-emoji tweet was plausibly\n*5 More, any inference of recklessness is less compelling misleading because it was perceived \u201cas a rallying cry to\nthan the \u201cnonculpable explanations\u201d for the statement: it buy Bed Bath\u2019s stock,\u201d even though Cohen had soured on\nwas meant to describe Bed Bath\u2019s efforts to right the ship. Bed Bath. Compl. \u00b6\u00b6 148\u201349; accord Friel v. Dapper\nTellabs, Inc., 551 U.S. at 324. Indeed, had Gove known of Labs, Inc., No. 21-cv-5837, 2023 WL 2162747, at *17\nCohen\u2019s impending sale, she had no reason to hide this (S.D.N.Y. Feb. 22, 2023) (finding same for rocket ship\nknowledge from investors. A coverup would only help emojis).\nCohen while further damaging the brand when investors\nlearned the truth. So Bratya fails to allege scienter too. Cohen objects that emojis can never be actionable\n because they have no defined meaning.4 In his view,\nBecause Bratya has stated no claim against Gove, the \u201cthere is no way to establish ... the truth ... of a tiny lunar\nCourt will dismiss it. But because proceedings against cartoon.\u201d Cohen MTD at 18. And similarly, emojis are at\nBed Bath are stayed, the Court will not dismiss the the very least \u201cambiguous.\u201d Cohen MTD at 17\u201318. But\ncompany now. those claims get him nowhere.\n\nBratya has one other claim against Gove\u2014control person To understand why, zoom out. Emojis are symbols. Like\nliability under \u00a7 20(a) of the Exchange Act. In essence, symbols, language can be ambiguous. If you say, \u201cThe\nthe claim is that Gove is responsible for Bed Bath\u2019s Nats are going to win the World Series this year,\u201d and\nsecurities fraud. See ATSI Commc\u2019ns, Inc. v. Shaar Fund, your friend replies, \u201cRight,\u201d she may be agreeing with\nLtd., 493 F.3d 87, 108 (2d Cir. 2007). But because Bratya you, but it could also be a sarcastic reply. Context and\nhas alleged no underlying securities fraud by Bed Bath, its tone help elucidate meaning. Just because language can\ncontrol person claim against Gove fails. See, e.g., id. (A be ambiguous does not mean it is not actionable or\nplaintiff that \u201cfails to allege any primary violation ... capable of being correctly understood.\ncannot establish control person liability.\u201d); see also Opp\u2019n\nat 61 (claiming that its control person claim should So too with symbols. People use symbols as \u201ca primitive\n but effective way of communicating ideas.\u201d W. Va. State\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 4\n\f Case 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 8 of 15 PageID: 10417\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\nBd. of Educ. v. Barnette, 319 U.S. 624, 632 (1943). Brokers.\u201d Id. \u00b6 111. He had a large stake himself. He was\nSometimes, symbols are ambiguous. If you texted your \u201cmaniacally focused on [Bed Bath\u2019s] long-term.\u201d Id. \u00b6 94.\nfriend to ask him to have dinner with you and he He had a public cooperation agreement with Bed Bath.\nresponded with the steak emoji, you might reasonably See id. \u00b6 99. He allegedly had access to material,\nwonder if he wanted to go to a steak house or fire up the nonpublic information. Id. \u00b6 100. And it seemed that he\ngrill. But like language, a symbol\u2019s meaning may be had helped oust Bed Bath\u2019s former CEO. Id. \u00b6\u00b6 111\u201312.\nclarified by \u201cthe context in which [the] symbol is used.\u201d So it was not crazy for retail investors to follow his lead.\nSpence v. Washington, 418 U.S. 405, 410 (1974); see also\nFairbanks v. Roller, 314 F. Supp. 3d 85, 90\u201391 (D.D.C. Nor is the tweet mere puffery. See In re Harman, 791\n2018) (discussing whether \u201cokay\u201d hand sign was actually F.3d at 109 (defining puffery as \u201cthe sort of generalized\na white power gesture). So if you knew that friend had statements of optimism that are not capable of objective\nsworn off restaurants, then you could be more certain that verification\u201d) (cleaned up). If Bratya had alleged only that\nhe was up for a cookout. the tweet expressed Cohen\u2019s hope that the stock would\n rise, that would not be actionable. See id. Likewise, if\n*6 So the Court declines Cohen\u2019s blanket rule. Emojis Bratya had alleged only that the tweet signaled Cohen\u2019s\nmay be actionable if they communicate an idea that would excitement about Bed Bath, Bratya would have no claim.\notherwise be actionable. A fraudster may not escape See id. But Bratya has plausibly alleged that Cohen\u2019s\nliability simply because he used an emoji. Just like with tweet was more, an expert insider\u2019s direction to buy or\nwords, liability will turn on the emoji\u2019s particular hold.\nmeaning in context.\n So this claim survives.\nThe questions here thus become: (1) Has Bratya plausibly\nalleged that the moon emoji has a particular meaning in 2. Cohen\u2019s 13D. Taking the Complaint as true, Cohen\u2019s\nthe context in which it was used? And if so, (2) is that amended 13D was materially misleading as well.\nmeaning actionable? Investors filing 13Ds have a duty to disclose any solid\n plans to sell their stock. See Azurite Corp. v. Amster &\nFirst, Bratya has plausibly alleged that the moon tweet Co., 52 F.3d 15, 18 (2d Cir. 1995) (\u201c[if] a course of action\nrelayed that Cohen was telling his hundreds of thousands is decided upon or intended, it [must] be disclosed\u201d in a\nof followers that Bed Bath\u2019s stock was going up and that 13D). Cohen has conceded as much. Motions Hr\u2019g Tr.\nthey should buy or hold. In the meme stock \u201csubculture,\u201d (Hr\u2019g Tr.), 55:22\u201324, ECF No. 90 (acknowledging that\nmoon emojis are associated with the phrase \u201cto the \u201cPlaintiff has to plead facts showing the Cohen\nmoon,\u201d which investors use to indicate \u201cthat a stock will Defendants had a definite plan to sell their stocks before\nrise.\u201d Compl. \u00b6 48. So meme stock investors conceivably they filed their Section 13D\u201d).\nunderstood Cohen\u2019s tweet to mean that Cohen was\nconfident in Bed Bath and that he was encouraging them *7 Bratya has plausibly alleged that Cohen had a definite\nto act. For example, one investor replied to Cohen \u201cbuy plan to sell. For one, the timing of Cohen\u2019s sales suggests\n$BBBY. Got it. Thanks.\u201d Id. \u00b6 150. And Bratya plausibly it. Cohen filed his 13D in the morning on August 16,\nalleges that Redditors gleaned the same message. Id. \u00b6 2022, and that very same day sold roughly $100 million\n151. in Bed Bath shares. See Compl. \u00b6 165. It is no stretch to\n infer that Cohen likely hatched that plan some time before\nSecond, that meaning is actionable. For one, it is plausibly that morning. More, Bratya has plausibly alleged that\nmaterial. That is, there was a \u201csubstantial likelihood that a Cohen filed the 13D as part of a broader plan to pump\nreasonable investor would consider it important.\u201d SEC v. Bed Bath\u2019s price so that he could dump his shares. And\nSteadman, 967 F.2d 636, 643 (D.C. Cir. 1992) (cleaned that scheme necessarily includes a solidified plan to sell.\nup). Investors appear to have relied on it, driving Bed So Bratya has met its burden for now.\nBath\u2019s stock price up in the following days. See Compl. \u00b6\n9 (alleging that \u201ctrading volume and the Company\u2019s stock Despite the reporting requirement, Cohen did not mention\nprice surged over the next few days\u201d); \u00b6 153. his purported plan to sell in his amended 13D. See id. \u00b6\n 160. That was misleading. And it was material too: meme\nPlus, that makes sense. Investors may have reasonably stock investors \u201creacted positively to his filing,\u201d sending\nseen Cohen as an insider sympathetic to the little guy\u2019s the stock price soaring \u201cby over 70%\u201d that same day. Id.\ncause: He interacted with his followers on Twitter. See, \u00b6\u00b6 162\u201363.\ne.g., id. \u00b6 74. He appeared to speak truth to power,\ncriticizing \u201ccompensation for the Corporate Power Cohen pushes back. To start, he claims that Bratya cannot\n\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 5\n\f Case 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 9 of 15 PageID: 10418\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\nbring a 10(b) claim based on a misleading statement in a here is different; does 10(b) reach misleading 13D filings?\n13D. See Cohen MTD at 19. Not so. As the Supreme\nCourt has directed, when determining \u201cthe scope of *8 Cohen could also be trying to argue that the Court\nconduct prohibited by \u00a7 10(b), the text of the statute should read 10(b) more narrowly in light of 18(a). That\ncontrols.\u201d Cent. Bank of Denver, N.A. v. First Interstate argument would run something like this: 10(b) is an\nBank of Denver, N.A., 511 U.S. 164, 173 (1994). And implied cause of action, whereas 18(a) is express. And\nCohen points to nothing in 10(b)\u2019s text to support a 18(a) clearly (and more narrowly) covers misleading\ncarveout for misleading 13Ds. Ignoring the text, he tries a statements in SEC filings like 13Ds. That poses two\nfew other arguments. But none persuade. problems for Bratya\u2019s claim. First, reading 10(b) to also\n cover misleading statements in SEC filings would render\nCohen first argues that \u201c[n]o private right of action for 18(a) superfluous. Second, \u201c[t]he express provision of one\ndamages exists under Section 13(d).\u201d Cohen MTD at 19. method of enforcing a substantive rule suggests that\nNo matter. Even if that is right, it does not follow that Congress intended to preclude others.\u201d Alexander v.\n10(b) claims may not be based on misleading 13D filings. Sandoval, 532 U.S. 275, 290 (2001). So the Court should\nId. Those are two separate questions. read 10(b) to exclude conduct covered by 18(a).\n\nCohen next says that a different section of the Exchange But this line fails to persuade as well. For one, Sandoval\nAct, 18(a), provides the exclusive remedy for claims dealt with the question of whether to imply a cause of\nbased on \u201ca false or misleading statement in a Schedule action in the first place, not the issue here\u201410(b)\u2019s reach.\n13D.\u201d Cohen Reply at 8, ECF No. 87 (quoting Kamerman See id. at 279. And the Supreme Court has rejected\nv. Steinberg, 891 F.2d 424, 430 (2d Cir. 1989)). The similar arguments for narrowing 10(b), refusing to do so\nCourt disagrees here too. despite 10(b)\u2019s overlap with other securities laws. See\n Herman & MacLean v. Huddleston, 459 U.S. 375, 383\nKamerman relies on a district court case, which in turn (1983) (\u201cThe fact that there may well be some overlap is\nrelies on dated Supreme Court dicta. See 891 F.2d at 430 neither unusual nor unfortunate.\u201d) (cleaned up); see also\n(citing Sanders v. Thrall Car Mfg. Co., 582 F. Supp. 945, Lorenzo v. SEC, 139 S. Ct. 1094, 1101\u201302 (2019) (finding\n960 (S.D.N.Y. 1983), aff\u2019d, 730 F.2d 910 (2d Cir. 1984)). same for intra-provision overlap in Rule 10b\u20135). Ditto for\nIn Touche Ross & Company v. Redington, the Court noted the D.C. Circuit. See Wachovia Bank & Tr. Co., N. A. v.\nthat \u201c[t]here is evidence to support the view that \u00a7 18(a) Nat\u2019l Student Mktg. Corp., 650 F.2d 342, 354\u2013359 (D.C.\nwas intended to provide the exclusive remedy for Cir. 1980) (\u201c[T]he express remedies are totally different\nmisstatements contained in\u201d SEC filings. 442 U.S. 560, from the remedy implied under section 10(b), and ... are\n573 (1979) (citing legislative history). But Redington meant to treat different problems and to be applied in\nexpressly declined to decide that question. See id. at 574 different situations.\u201d).\n(\u201c[W]e need not decide whether Congress expressly\nintended \u00a7 18(a) to provide the exclusive remedy for Finally, Cohen claims that his disclosures in past 13Ds\nmisstatements contained in \u00a7 17(a) reports.\u201d). Plus, it save him. As he explains it, he \u201ctwice disclosed the\nrelied on legislative history, a now discredited method of possibility that [he] could sell ... at any time.\u201d Cohen\nstatutory interpretation. See id. at 573 n.15. The Court has MTD at 20. But those generic warnings that he \u201cmay\nsince directed that when determining \u201cthe scope of endeavor to increase or decrease [his] position,\u201d are\nconduct prohibited by \u00a7 10(b), the text of the statute different than his alleged concrete plan to dump $100\ncontrols.\u201d Cent. Bank of Denver, 511 U.S. at 173. So million in stock, a plan that Cohen failed to disclose. Id.\nRedington and Kamerman do not resolve the issue. Once that plan crystallized, he had a duty to report it. And\n this case may show why; his failure to report the plan\nNor is this Court persuaded by Cohen\u2019s other cases. allegedly misled investors.\nMotient Corporation v. Dondero noted that \u201cSection 18(a)\nprovides the sole basis for a private right of action for So Bratya\u2019s 13D theory may proceed.\ndamages resulting from a violation of Section 13(d).\u201d 529\nF.3d 532, 536 (5th Cir. 2008) (citing Hallwood Realty 3. Cohen\u2019s Form 144. Cohen\u2019s Form 144 was materially\nPartners, L.P. v. Gotham Partners, L.P., 286 F.3d 613, misleading too. Bratya\u2019s theory goes like this: On the\n620 (2d Cir. 2002)). But Motient dealt with a different same day that Cohen began dumping stock, he filed a\nissue\u2014whether to imply a cause of action under 13(d) for Form 144. In that form he mentioned only \u201cthe potential\nmoney damages. See id. And the case Motient cites, sale\u201d of Bed Bath stock and certified that he knew of no\nHallwood, dealt with that same question and relied on the \u201cmaterial adverse information\u201d about Bed Bath. Compl. \u00b6\nTouche Ross dicta. See 286 F.3d at 619\u201320. The question 173.\n\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 6\n\fCase 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 10 of 15 PageID: 10419\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\n But Bratya\u2019s two other theories flop. Start with Bratya\u2019s\nIn Bratya\u2019s view, this was \u201cmaterially false and theory that Cohen violated SEC rules. Cohen needed to\nmisleading\u201d for a few reasons. First, Cohen referred only submit his Form 144 only \u201cconcurrently\u201d with the stock\nto a \u201cpotential sale,\u201d even though he had already sold sales. See 17 C.F.R. \u00a7 230.144(h); see also SEC, Div.\nstock. Second, Cohen lied about knowing no material, Corp. Fin., Compliance and Disclosure Interpretations,\nnonpublic information about Bed Bath. Third, he Securities Act Rules, Question 136.09 (2017) (clarifying\n\u201csubmitted the Form 144 after placing a sell order with that a Form 144 must be submitted \u201con the same day as\nhis broker in violation of SEC Rule 144.\u201d Id. \u00b6 174 the ... execution of the sale\u201d). And he did just that, filing\n(emphasis in original). And fourth, Cohen had already his Form 144 the same day that he began dumping shares.\nsold the stock when he created the Form 144, yet he said See Compl. \u00b6 169. So he did not violate the SEC\u2019s\non the form that he had sold none in the past three requirement that the form be submitted concurrently with\nmonths. See id. \u00b6\u00b6 170\u201371, 174. his trades.\n\nOnly Bratya\u2019s first two theories survive. Bratya plausibly Similarly, he did not lie when reporting \u201cNone\u201d in the\nalleges that Cohen had sold his shares by the time he Form 144 Table labeled \u201cSECURITIES SOLD DURING\nsubmitted his Form 144. See Compl. \u00b6\u00b6 170\u201372 THE PAST 3 MONTHS.\u201d Decl. of Clifford Thau, Ex. 10,\n(analyzing metadata and \u201chistorical market data\u201d to ECF No. 71-10. In context, that box clearly asks sellers to\nconclude that Cohen sold the share before he submitted report only sales other than the sale that prompted the\nthe Form 144). Thus, his reference to \u201cpotential\u201d sales filing. So Cohen need not have reported the Bed Bath sale\nwas misleading. Those sales had likely already happened. from earlier that day in that particular table.\nSo he should have instead said something like \u201csales\u201d or\n\u201cpast sales.\u201d\n\nAnd Bratya\u2019s second theory lives on too. Taking Bratya\u2019s\nallegations as true, it plausibly alleges that Cohen was 2.\nprivy to material adverse information that was nonpublic.\nMost glaringly, Cohen\u2019s Cooperation Agreement with Cohen next claims that Bratya fails to sufficiently allege\nBed Bath \u201cacknowledged that Cohen would receive element two\u2014scienter. Recall that to satisfy that element,\nmaterial, nonpublic information.\u201d Compl. \u00b6 100. Bratya\u2019s Complaint must give a \u201cstrong inference\u201d of\n scienter. 15 U.S.C. \u00a7 78u\u20134(b)(2)(A). And to figure out if\n*9 Plus, the timing of Cohen\u2019s trades was sketchy. He it did, the Court must \u201cconsider plausible, nonculpable\ndumped his entire stake on August 16 and 17. Shortly explanations for [Cohen\u2019s] conduct, as well as inferences\nafter, the following became public: favoring\u201d Bratya. Tellabs, Inc., 551 U.S. at 324. In the\n end, Bratya\u2019s claim survives \u201conly if a reasonable person\n \u2022 Bed Bath was failing to pay suppliers (August 19). would deem the inference of scienter cogent and at least\n See id. \u00b6 197. as compelling as any\u201d innocent one. Id. Bratya has\n alleged enough.\n \u2022 Bed Bath was firing 20% of its employees and\n closing 150 stores (August 31). See id. \u00b6 199. For one, Bratya has alleged a motive; Cohen\u2019s shares had\n lost over 80% of their value at the time his alleged\n \u2022 Bed Bath was not going to sell buybuy BABY scheme began. See Compl. \u00b6 188 (alleging that Cohen\u2019s\n (August 31). See id. \u00b6 199. investment was down 82%). So he may have been keen to\n offset those losses. And Cohen knew that meme stock\n \u2022 Bed Bath\u2019s investment rating was downgraded investors would drive up the stock\u2019s price when he\n (September 1). See id. \u00b6 200. tweeted or submitted regulatory filings. See, e.g., id. \u00b6 83\n (awareness of tweets); see id. \u00b6 193 (awareness of\nCohen just barely beat this bad news, which suggests that regulatory filings). And that makes the timing of his sales\nhe saw it coming. Plus, Cohen had access to Bed Bath\u2019s suspicious: Cohen tweets and files a 13D. The stock\nboard. See, e.g., id. \u00b6\u00b6 111\u201313 (suggesting that Cohen skyrockets. Cohen then dumps his stock. And all this\nconvinced the Board to fire Bed Bath\u2019s then-CEO). And happens just weeks before bad news about Bed Bath\nhe handpicked three of its members. See id. \u00b6 99. Finally, breaks publicly.\nhe spoke with Bed Bath\u2019s CFO and \u201cother executives.\u201d\nId. \u00b6 124. So Cohen plausibly traded on material, adverse, Cohen offers a competing inference. He \u201cdecided to exit\nand nonpublic information. his position when the price unexpectedly increased to a\n value that exceeded what he believed it was worth.\u201d\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 7\n\fCase 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 11 of 15 PageID: 10420\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\nCohen MTD at 25. Plausible enough. But to accept this See Halliburton Co., 573 U.S. at 273. A value investor is\nstory, the Court must view Cohen\u2019s amended 13D as a one \u201cwho believes that certain stocks are undervalued or\nlucky happenstance. In his telling, he had no concrete overvalued and attempts to \u2018beat the market\u2019 by buying\nplans to sell on the morning of August 16. He then filed a the undervalued stocks and selling the overvalued ones.\u201d\n13D, and, as it had in the past, the price surged. Then (and Id. (cleaned up); see also Howard v. Liquidity Servs. Inc.,\nonly then) Cohen formed his plan to sell. That is a stretch. 322 F.R.D. 103, 124 (D.D.C. 2017) (discussing same).\nSo considering the Complaint as a whole, Bratya\u2019s More, \u201c[d]ebates about the precise degree to which stock\ninference is more compelling. See Tellabs, Inc., 551 U.S. prices accurately reflect public information are ... largely\nat 324. So the Court will not dismiss the 10(b) claim on beside the point.\u201d Halliburton Co., 573 U.S. at 272\nscienter grounds either. (emphasis in original). As the Court explained, \u201c[t]hat the\n price of a stock may be inaccurate does not detract from\n the fact that false statements affect it, and cause loss.\u201d Id.\n (cleaned up). So too here.\n 3. Affiliated Ute. But Bratya cannot rely on Affiliated Ute.\n That theory is available only if the brunt of its case\n*10 Cohen also trains his sights on reliance, the claim\u2019s concerns omissions, rather than affirmative lies. See 406\nfourth element. This element \u201censures that there is a U.S. at 153\u201354. That is not the case here.\nproper connection between a defendant\u2019s\nmisrepresentation and a plaintiff\u2019s injury.\u201d Halliburton By Bratya\u2019s count, four of its five claims involve\nCo., 573 U.S. at 267 (cleaned up). To meet it, Bratya omissions. See Opp\u2019n at 49. But it counts two claims from\npoints to two reliance presumptions. First, under the the Bed Bath Defendants, neither of which should count\nfraud-on-the-market theory, courts presume reliance when at this point. The claims against Gove will be dismissed\na plaintiff shows \u201c(1) that the alleged misrepresentations and proceedings against the company are stayed. Cf. Hr\u2019g\nwere publicly known, (2) that they were material, (3) that Tr., 36:1\u20134 (Bratya conceding that \u201cif you dismiss those\nthe stock traded in an efficient market, and (4) that the statements ..., then the only statements that would be\nplaintiff traded the stock between the time the relevant to that analysis are the ones that are still in the\nmisrepresentations were made and when the truth was case\u201d). And it counts its Form 144 claim as an omission,\nrevealed.\u201d Id. at 268. And second, courts presume reliance which misses the mark. The heart of Bratya\u2019s Form 144\nwhen a plaintiff\u2019s claims are based mainly on omissions claim is that Cohen lied. He called the stock sales\n(rather than affirmative lies). See Affiliated Ute Citizens of potential when they had already closed. And he said he\nUtah v. United States, 406 U.S. 128, 153 (1972). had received no insider information when he in fact had.\n Those are affirmative lies, not omissions. Indeed, Bratya\nBratya has adequately pled its fraud-on-the-market theory basically admits as much. See, e.g., Opp\u2019n at 28 (\u201cCohen\nbut not Affiliated Ute reliance. Lied in his Form 144\u201d). So two of Bratya\u2019s three live\n claims involve affirmative misrepresentations and thus\nFraud-on-the-market. Cohen urges that Bratya has failed Affiliated Ute does not apply. 406 U.S. at 153 (applying\nto allege an efficient market. As he explains it, \u201c[i]n an reliance presumption to a \u201ccase ... involving primarily a\nefficient market, all publicly available information is failure to disclose) (emphasis added).\nincorporated into [a company\u2019s] stock price.\u201d Cohen\nMTD at 28. But here, Bed Bath\u2019s stock rose after Cohen\u2019s\ntweets and filings, despite bleak reporting on Bed Bath\u2019s\noutlook. See id. Cohen says that is \u201cfundamentally\ninconsistent with ... an efficient market.\u201d Id. Cohen\u2019s terse 4.\nargument appears to be that the market here cannot be\nefficient because a stock\u2019s price in an efficient market *11 Last, Cohen says that Bratya fails to adequately plead\nwould reflect a company\u2019s fundamentals and not 10(b)\u2019s sixth element, loss causation. To do that, Bratya\nstatements from one large investor. And \u201crational, \u201cmust simply give defendants some indication of the\nreasonable, intelligent investors\u201d would not react to actual loss suffered and of a plausible causal link between\ntweets and filings that contained no new information. that loss and the alleged misrepresentations.\u201d Loreley Fin.\nHr\u2019g Tr., 82:2\u201315. (Jersey) No. 3 Ltd. v. Wells Fargo Sec. LLC, 797 F.3d\n 160, 187 (2d Cir. 2015) (cleaned up).\nBut Supreme Court precedent is not so exacting. For one,\nthe Court has clarified that the existence of value Bratya did so. Start with Cohen\u2019s tweet. \u201c[A]n\ninvestors does not undercut fraud-on-the-market reliance. overwhelming majority of retail investors unambiguously\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 8\n\fCase 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 12 of 15 PageID: 10421\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\nunderstood his statements as a rallying cry to buy or hold\u201d called scheme liability\u201d claims. SEC v. Familant, 910 F.\nBed Bath stock. Compl. \u00b6 151. As a result, Bed Bath\u2019s Supp. 2d 83, 93 (D.D.C. 2012) (cleaned up). And to make\nstock rose from $10.63 to $12.95 the next day. Id. \u00b6 153. out its scheme liability claim, Bratya \u201cmust satisfy both\nAnd Cohen\u2019s 13D had a similar effect. The day he filed it, the statute and the regulation.\u201d Id. at 92.\nBed Bath\u2019s stock spiked 70%. Id. \u00b6 163. Finally, his Form\n144 served his alleged pump and dump scheme by Cohen\u2019s main theory is that scheme liability claims\ndelaying news of his exit. \u201ccannot be based solely upon misrepresentations or\n omissions.\u201d Cohen MTD at 34 (quoting ATSI Commc\u2019ns,\nNone of Cohen\u2019s arguments persuade. He first claims that 493 F.3d at 101). And thus, Bratya\u2019s scheme claim fails\nBed Bath\u2019s stock \u201cwas already experiencing extreme because it alleges only misrepresentations or omissions.\nvolatility\u201d before he did anything. Cohen MTD at 29. And\nhe notes that Bed Bath was doing poorly. See id. at 31. *12 But even if Cohen is right about that legal rule, his\nBecause of this, he says that it is implausible that his line of attack still fails. Bratya has alleged a pump and\nmisstatements would make Bed Bath\u2019s stock skyrocket. dump scheme that relies on more than just\nThe Court disagrees. Bratya plausibly alleges that Cohen misrepresentations or omissions. For instance, it claims\nhad a cult following of meme stock investors who that Cohen delayed filing two SEC forms \u201cto stimulate\nenthusiastically followed his moves and invested demand in Bed Bath\u2019s securities knowing that the mere\naccordingly. See, e.g., Compl. \u00b6 142 (quoting a Cohen act of filing these documents\u201d would spur trading and\nfan), \u00b6 144 (\u201c[U]sers on various Reddit forums continued thus pump Bed Bath\u2019s stock price. Compl. \u00b6 233. And\nto tweet about the importance of Cohen\u2019s holdings.\u201d), \u00b6 Bratya also claims that Cohen slow-walked his Form 144\n150 (Twitter user responding to Cohen tweet with \u201cbuy and then filed it in a way \u201cdesigned to ensure that its\n$BBBY. Got it. Thanks\u201d). release would be delayed.\u201d Id.\n\nFinally, Cohen claims that Bratya \u201ccannot plead loss Cohen\u2019s own cases concur. Indeed, the Second Circuit has\ncausation without undermining its reliance allegations\u201d recently held that \u201cmisstatements and omissions can form\nfor the 13D claim. Cohen MTD at 32. For reliance part of a scheme liability claim, but an actionable scheme\npurposes Bratya claims that Bed Bath stock was traded in liability claim also requires something beyond\nan efficient market. But here, Cohen says, Bratya tries to misstatements and omissions, such as dissemination.\u201d\nclaim that the 13D caused Bed Bath\u2019s price to spike, SEC v. Rio Tinto plc, 41 F.4th 47, 49 (2d Cir. 2022)\ndespite that filing offering no new information. But as (emphasis in original). So Bratya may rely (in part) on\npled, the 13D did include new information; at the time of misrepresentations and omissions.\nfiling, Cohen had no solid plans to sell his stock. In other\nwords, it told investors that he was still confident in Bed Pushing back, Cohen says the SEC forms cannot support\nBath, despite bad news about the company\u2019s Cohen\u2019s scheme liability claims because Bratya never\nfundamentals. So this argument also fails. plausibly alleges that those were misleading. See Cohen\n Reply at 21. But the 13D was plausibly misleading. And\n besides, the point here is that Bratya alleges a course of\n conduct that includes more than just misrepresentations or\n omissions. It does not rely on those delayed SEC filings\n B. alone. See Compl. \u00b6\u00b6 231\u201333 (alleging that Cohen misled\n investors, concealed his plan to sell, and pumped Bed\nCohen next challenges Count II, Bratya\u2019s claim under \u00a7 Bath\u2019s stock before dumping it).\n10(b) of the Exchange Act and SEC Rules 10b\u20135(a) and\n(c). But this claim survives too. Cohen\u2019s other arguments flounder too. He first claims that\n he never \u201cinjected inaccurate information into the\nSection 10(b) of the Exchange Act prohibits using \u201cany marketplace.\u201d Cohen MTD at 35 (quoting Noto v. 22nd\nmanipulative or deceptive device ... in contravention of Century Grp., Inc., 35 F.4th 95, 106 (2d Cir. 2022)). But\n[SEC] rules and regulations.\u201d 15 U.S.C. \u00a7 78j(b). Under he never explains why the statute or regulation requires\nthat Section, the SEC promulgated Rule 10b\u20135. that judge-made element. Nor does he explain why Bratya\nSubsection (a) makes it unlawful to \u201cemploy any device, does not meet it. Cohen\u2019s tweet gave the false impression\nscheme, or artifice to defraud.\u201d 17 C.F.R. \u00a7 240.10b\u20135(a). that Cohen thought the stock would rise. His 13D gave\nAnd subsection (c) makes it unlawful to \u201cengage in any the false impression that he had no solid plans to sell. And\nact, practice, or course of business which operates or his Form 144 suggested that his plans to sell were merely\nwould operate as a fraud or deceit.\u201d 17 C.F.R. \u00a7 \u201cpotential.\u201d That is enough.\n240.10b\u20135(c). Subsection (a) and (c) claims \u201care often\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 9\n\fCase 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 13 of 15 PageID: 10422\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\n the Court will not dismiss this claim either.\nFinally, Cohen says that Bratya\u2019s scheme claim fails\nbecause it alleges no \u201cmarket activity,\u201d like \u201cwash sales, Section 9(a)(3). Finally, Cohen urges that Bratya\u2019s claim\nmatched orders, or rigged prices.\u201d Cohen MTD at 35 under \u00a7 9(a)(3) of the Exchange Act should be dismissed\n(quoting ATSI, 493 F.3d at 101). But that distorts binding because that provision \u201capplies only to broker-dealers\nprecedent. True, the Supreme Court has given \u201cwash who make predictions in the ordinary course of that\nsales, matched orders, or rigged prices\u201d as general business,\u201d not professional traders like Cohen. Cohen\nexamples of actionable conduct. Santa Fe Indus., Inc. v. MTD at 38\u201339; Compl. \u00b6\u00b6 251\u201356 (Count V). Not so.\nGreen, 430 U.S. 462, 476 (1977). But scheme liability is\nbroader. In Lorenzo v. SEC, the Court held that simply Section 9(a)(3) reads as follows:\nemailing \u201cfalse or misleading statements to potential\ninvestors with the intent to defraud\u201d was enough. 139 S.\nCt. 1094, 1099 (2019). So this quibble fails too.5\n If a dealer, broker, security-based\n swap dealer, major security-based\n swap participant, or other person\n selling or offering for sale or\n C. purchasing or offering to purchase\n the security, a security-based swap,\nThe rest of Bratya\u2019s claims are a mixed bag. Four survive; or a security-based swap agreement\none does not. with respect to such security, to\n induce the purchase or sale of any\n security registered on a national\n securities exchange, any security\n not so registered, any\n 1. security-based swap, or any\n security-based swap agreement\nStart with Bratya\u2019s surviving claims. with respect to such security by the\n circulation or dissemination in the\nSection 20(a). As with Gove, Bratya claims that Ryan ordinary course of business of\nCohen is responsible for his company, RC Ventures\u2019s, information to the effect that the\nsecurities fraud under \u00a7 20(a) of the Exchange Act. price of any such security will or is\nCompl. \u00b6\u00b6 239\u201345 (Count III). Cohen offers only one likely to rise or fall because of\nrebuttal; RC Ventures committed no securities fraud. But market operations of any 1 or more\nthe Court has found that Bratya has plausibly alleged that persons conducted for the purpose\nRC Ventures violated 10(b) of the Exchange Act and SEC of raising or depressing the price of\nRule 10b\u20135. So Bratya\u2019s claim against Ryan Cohen such security.\nsurvives.\n\nSection 9(a)(4). Cohen also moves to dismiss Bratya\u2019s\nclaim under \u00a7 9(a)(4) of the Exchange Act. See Compl. \u00b6\u00b6 15 U.S.C. \u00a7 78i(a)(3). Start with the first two lines. Bratya\n257\u201363 (Count VI); 15 U.S.C. \u00a7 78i(a)(4). Cohen says never claims that Cohen is \u201ca dealer, broker,\nonly that this claim essentially mirrors Bratya\u2019s 10(b) security-based swap dealer, major security-based swap\nclaim and thus must be dismissed for the same reasons. participant.\u201d Instead, it claims that Cohen falls in the\nBut because the Court will not dismiss Bratya\u2019s 10(b) catchall provision. Cohen is an \u201cother person selling or\nclaim, it will not dismiss this one either. offering for sale or purchasing or offering to purchase the\n security.\u201d See Hr\u2019g Tr., 43\u201344 (Bratya claiming that\n*13 Section 20A. Cohen\u2019s argument against Bratya\u2019s \u00a7 Cohen is \u201cno different from a broker or a dealer\u201d and that\n20A claim for insider trading fares no better. See Compl. \u201cwe\u2019re [not] talking about any ordinary person selling and\n\u00b6\u00b6 264\u201371 (Count VII). Here, Cohen argues only that purchasing shares\u201d).\nBratya (1) \u201chas failed to allege any predicate violation of\nthe Exchange Act\u201d and (2) that Bratya has \u201cfailed to Bratya has the better reading; \u201cother person,\u201d includes\nplausibly allege that Mr. Cohen possessed material, non-listed professional stock traders. For one, the general\nnonpublic information at the time of his trades.\u201d Cohen other-person phrase follows a more specific list. In such\nMTD at 40. But, as explained, Bratya has done both. So cases, the canon of ejusdem generis holds that \u201cthe\n\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 10\n\fCase 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 14 of 15 PageID: 10423\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\ngeneral words are usually construed to embrace only Cohen is no average trader. Because Bratya plausibly\nobjects similar in nature to those objects enumerated by alleges that Cohen is a market professional, this claim\nthe preceding specific words.\u201d Yates v. United States, 574 survives as well.\nU.S. 528, 545 (2015) (cleaned up). That is a point in favor\nof reading \u201cother person\u201d to include other types of\nprofessional traders.\n\nMore, if the Court adopted Bratya\u2019s reading\u2014only 2.\n\u201cbroker-dealers\u201d\u2014it would render that \u201cother person\u201d\nphrase surplusage. But see Marx v. Gen. Revenue Corp., But another claim must be dismissed.\n568 U.S. 371, 386 (2013) (\u201ccanon against surplusage is\nstrongest when an interpretation would render superfluous Section 9(a)(2). Cohen argues that Bratya\u2019s claim under \u00a7\nanother part of the same statutory scheme\u201d). That too 9(a)(2) of the Exchange Act should be dismissed because\nsuggests that \u201cother person\u201d means other market Bratya alleges no \u201cseries of transactions\u201d in a security.\nprofessionals. And this reading avoids liability for Cohen MTD at 37\u201338; Compl. \u00b6\u00b6 246\u201350 (Count IV).\naverage day traders, so the list of market professionals The Court agrees. As part of its \u00a7 9(a)(2) claim, Bratya\ncontinues to do work. needed to plead \u201ca series of transactions in any security.\u201d\n See 15 U.S.C. \u00a7 78i(a)(2). Yet Bratya points to no \u201cseries\nLanguage later in the provision bolsters Bratya\u2019s reading. of transactions in any security.\u201d\nFor clarity, the provision\u2019s elements can be (roughly)\nbroken down as follows: Bratya alleges that \u201cCohen strategically filed a delayed\n Form 3 and Schedule 13D to create the appearance of\n \u201cIt shall be unlawful\u201d trading activity.\u201d Opp\u2019n at 63. And it claims that Cohen\n \u201cstrategically filed a Form 144 to control the time of its\n 1. For a covered person publication and ensure[ ] the price of [Bed Bath\u2019s]\n securities remained high while he secretly sold his\n 2. \u201cto induce the purchase or sale of any security\u201d holdings.\u201d Id. Those are regulatory filings, not\n \u201ctransactions in\u201d a security. They are not stock purchases\n 3. \u201cby the circulation or dissemination [of or sales, nor even \u201cbids and orders to purchase or sell\n information] in the ordinary course of business\u201d securities.\u201d SEC v. Lek Sec. Corp., 276 F. Supp. 3d 49, 62\n (S.D.N.Y. 2017). Thus, the Court declines Bratya\u2019s\n *14 4. \u201cto the effect that the price of any such invitation to read \u201ctransaction in any security\u201d to include\n security will or is likely to rise or fall because of any regulatory filings related to that security.\n market operations of any 1 or more persons\u201d\n\n 5. \u201cconducted for the purpose of raising or\n depressing the price of such security\u201d\n V.\nNote that the third element has an important condition;\nthe \u201ccirculation or dissemination\u201d must be done \u201cin the Bratya alleges no plausible claims against Gove, so those\nordinary course of business.\u201d Like the other textual clues, must be dismissed. But because most of its claims against\nthat language suggests that this provision is aimed at Cohen and RC Ventures are plausible, only Bratya\u2019s \u00a7\nthose who ordinarily circulate or disseminate information 9(a)(2) claim against them will be dismissed.\nabout stocks, those like professional traders. Because the\nprovision\u2019s text supports reading \u201cother person\u201d as A separate Order will issue today.\nincluding professional traders, the Court will do so.\n\nBratya has also plausibly alleged that Cohen fits that bill. All Citations\nSee, e.g., Compl. \u00b6 44 (alleging that since 2020 \u201cCohen\nhas been primarily focused on private investments\u201d); \u00b6 55 --- F.Supp.3d ----, 2023 WL 4824734\n(alleging that Cohen bought nearly 10% of GameStop); \u00b6\n92 (alleging that Cohen bought a large stake of Bed Bath).\n Footnotes\n\n\n\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 11\n\fCase 3:18-cv-02293-GC-RLS Document 249 Filed 08/02/23 Page 15 of 15 PageID: 10424\n\n\nIn re Bed Bath & Beyond Corporation Securities Litigation, --- F.Supp.3d ---- (2023)\n\n\n\n\n1\n The following factual recitation is based on the Complaint\u2019s allegations, which the Court for now accepts as true. See\n L. Xia v. Tillerson, 865 F.3d 643, 649 (D.C. Cir. 2017).\n\n\n\n2\n Gove also argues that Bratya failed to adequately plead reliance. But because Bratya\u2019s claim fails on other grounds,\n the Court does not reach that one.\n\n\n\n3\n Except for when discussing \u00a7 20(a) (and in the conclusion), the Court refers throughout to Cohen and his company,\n RC Ventures, as simply \u201cCohen.\u201d\n\n\n\n4\n Cohen does not make the textual argument that emojis cannot count as a \u201cstatement\u201d within the meaning of the\n Rule 10b\u20135(b). See 17 C.F.R. \u00a7 240.10b\u20135(b) (prohibiting \u201cuntrue statement[s] of ... material fact\u201d). So the Court\n does not consider this.\n\n\n\n5\n Cohen also cites back to his failed loss causation and scienter arguments from the other 10(b) claim, adding nothing\n new. For the reasons already discussed, the Court rejects those.\n\n\n\n\nEnd of Document \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works.\n\n\n\n\n \u00a9 2023 Thomson Reuters. No claim to original U.S. Government Works. 12\n\f","ocr_status":2,"date_upload":"2023-09-17T20:07:44.267186-07:00","document_number":"249","attachment_number":null,"pacer_doc_id":"119020130173","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2023-08-02T09:42:22.251407-07:00","date_modified":"2026-06-16T08:51:14.876123-07:00","date_filed":"2023-08-02","time_filed":"12:09:13","entry_number":249,"recap_sequence_number":"2023-08-02.001","pacer_sequence_number":903,"description":"Letter from Joseph J. DePalma to the Hon. Georgette Castner, U.S.D.J. (DEPALMA, JOSEPH) (Entered: 08/02/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/346439096/","id":346439096,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/352817800/","id":352817800,"tags":[],"absolute_url":"/docket/6313843/248/takata-v-riot-blockchain-inc/","date_created":"2023-06-13T13:02:33.355133-07:00","date_modified":"2026-06-16T08:51:14.849546-07:00","sha1":"c1aee6059654806088661c40cad92c4e8754263f","page_count":2,"file_size":126526,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.248.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.248.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 248 Filed 06/13/23 Page 1 of 2 PageID: 10408\n\n\n\n\n James E. Cecchi, Esq.\n CARELLA, BYRNE, CECCHI,\n OLSTEIN, BRODY & AGNELLO, P.C.\n 5 Becker Farm Road\n Roseland, New Jersey 07068\n Telephone: (973) 994-1700\n Fascimile: (973) 994-1744\n Email: JCecchi@carellabyrne.com\n UNITED STATES DISTRICT COURT\n DISTRICT OF NEW JERSEY\n _____________________________________________________________________________________\n CREIGHTON TAKATA, Individually: and : Case No. 3:18-cv-02293-GC-RLS\n on behalf of all others similarly situated, :\n :\n Plaintiff, :\n v. :\n :\n RIOT BLOCKCHAIN, INC., et al. :\n :\n Defendants. :\n :\n :\n _____________________________________________________________________________________\n\n NOTICE OF WITHDRAWAL OF APPEARANCE\n\n\n PLEASE TAKE NOTICE that James E. Cecchi, an attorney with the law firm\n\n Carella, Byrne, Cecchi, Olstein, Brody & Agnello, P.C., withdraws his appearance as\n\n counsel for Saroor Alam in the above-captioned matter. The individual is no longer seeking\n\n appointment as lead plaintiff on behalf of the class. The Clerk of this Court is respectfully\n\n requested to terminate James. E. Cecchi from the Court\u2019s docket and to remove the\n\n undersigned counsel from the Court\u2019s service list for purposes of receiving electronic filings.\n\fCase 3:18-cv-02293-GC-RLS Document 248 Filed 06/13/23 Page 2 of 2 PageID: 10409\n\n\n\n\n Dated: June 13, 2023 Respectfully submitted,\n\n CARELLA, BYRNE, CECCHI,\n OLSTEIN, BRODY & AGNELLO, P.C\n\n By: /s/ James E. Cecchi_________\n James E. Cecchi, Esq.\n 5 Becker Farm Road\n Roseland, New Jersey 07068\n Telephone: (973) 994-1700\n Facsimile: (973) 994-1744\n Email: JCecchi@carellabyrne.com\n\f","ocr_status":2,"date_upload":"2023-09-17T20:07:21.418849-07:00","document_number":"248","attachment_number":null,"pacer_doc_id":"119019978271","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Notice to Withdraw from NEF as to Case","acms_document_guid":""}],"date_created":"2023-06-13T13:02:33.347761-07:00","date_modified":"2026-06-16T08:51:14.828185-07:00","date_filed":"2023-06-13","time_filed":"15:42:34","entry_number":248,"recap_sequence_number":"2023-06-13.001","pacer_sequence_number":901,"description":"Notice to be terminated and withdraw from Notices of Electronic filing as to case. Attorney JAMES E. CECCHI terminated. (CECCHI, JAMES) (Entered: 06/13/2023)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/214053593/","id":214053593,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/220031710/","id":220031710,"tags":[],"absolute_url":"/docket/6313843/238/takata-v-riot-blockchain-inc/","date_created":"2022-12-13T11:58:52.825049-08:00","date_modified":"2026-06-16T08:51:14.383908-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"238","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order","acms_document_guid":""}],"date_created":"2022-12-13T11:58:52.815748-08:00","date_modified":"2026-06-16T08:51:14.366235-07:00","date_filed":"2022-08-30","time_filed":null,"entry_number":238,"recap_sequence_number":"2022-08-30.003","pacer_sequence_number":null,"description":"TEXT ORDER: The Court is in receipt of the August 29, 2022 Letter submitted by Plaintiff (ECF No. 235 ) and the Letter submitted by Defendant in response (ECF No. 236 .). Plaintiff's request to submit a single omnibus opposition to the pending Motions to Dismiss is denied, and the parties are directed to continue the briefing schedule pursuant to this Court's rules and the stipulation at ECF No. 230 . So Ordered by Judge Georgette Castner on 8/30/2022.(adi, ) (Entered: 08/30/2022)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/214053592/","id":214053592,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/234692629/","id":234692629,"tags":[],"absolute_url":"","date_created":"2023-03-06T02:04:21.994129-08:00","date_modified":"2026-06-16T08:51:14.308276-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"QC - Electronic signature does not match e-filer","acms_document_guid":""}],"date_created":"2022-12-13T11:58:52.775700-08:00","date_modified":"2026-06-16T08:51:14.286453-07:00","date_filed":"2022-08-30","time_filed":null,"entry_number":null,"recap_sequence_number":"2022-08-30.001","pacer_sequence_number":null,"description":"CLERK'S QUALITY CONTROL MESSAGE - The 236 Letter submitted by TYLER BAKER on 8/29/2022 contains an improper signature. Only the filing user is permitted to sign electronically filed documents with an s/. PLEASE RESUBMIT THE DOCUMENT WITH A PROPER ELECTRONIC SIGNATURE. This submission will remain on the docket unless otherwise ordered by the court. (mg)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/208779817/","id":208779817,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/6313843/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/214675661/","id":214675661,"tags":[],"absolute_url":"/docket/6313843/246/takata-v-riot-blockchain-inc/","date_created":"2022-10-11T14:37:41.616753-07:00","date_modified":"2026-06-16T08:51:14.765524-07:00","sha1":"38c60d4f036ccc80fca6db8dd913d1fdcbb0a1d0","page_count":3,"file_size":272616,"filepath_local":"recap/gov.uscourts.njd.366851/gov.uscourts.njd.366851.246.0_1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.njd.366851/gov.uscourts.njd.366851.246.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 3:18-cv-02293-GC-RLS Document 246 Filed 10/11/22 Page 1 of 3 PageID: 10399\n\n\n\n\n October 11, 2022\n\n\n VIA ECF\n Honorable Georgette Castner, U.S.D.J.\n United States District Court, District of New Jersey\n Clarkson S. Fisher Federal Building & United States Courthouse\n 402 East State Street\n Trenton, NJ 08608\n\n Re: Takata v. Riot Blockchain, Inc., et al.\n Civil Action No. 3:18-cv-02293(GC)(RLS)\n\n Dear Judge Castner:\n\n I write, reluctantly, on behalf of Lead Plaintiff (\u201cPlaintiff\u201d) in the above-referenced matter\n and in response to Chad Peterman\u2019s October 7, 2022 letter (the \u201c10/7/22 Letter,\u201d ECF No. 245) on\n behalf of Defendants Riot Blockchain, Inc., John O\u2019Rourke, and Michael Beeghley (the \u201cRiot\n Defendants\u201d). Plaintiff\u2019s counsel had requested that the Riot Defendants correct a misstatement\n in their Reply (ECF No. 244) concerning one of Plaintiff\u2019s scienter allegations against Defendants\n O\u2019Rourke and Barry Honig. Specifically, the Riot Defendants incorrectly stated that Plaintiff\u2019s\n allegation that \u201cO\u2019Rourke and Honig shared office space . . . is based solely on the allegation in a\n CNBC article in which CNBC crew members visited Honig\u2019s office and ran into O\u2019Rourke who\n was visiting that day.\u201d (ECF No. 244 at 13 n.16 (emphasis added).) As the Riot Defendants now\n acknowledge, Plaintiff\u2019s allegation is also based on identical allegations made by the U.S.\n Securities and Exchange Commission (\u201cSEC\u201d) in two securities fraud complaints1 that the SEC\n filed against O\u2019Rourke and Honig on September 6, 2018 and March 8, 2019. The SEC\u2019s\n complaints are Exhibits A and B to Plaintiff\u2019s Third Amended Complaint (\u201cTAC\u201d). See TAC Exs.\n A & B (ECF No. 231-1 at 1-155).\n\n In their letter, rather than simply correct their misstatement, the Riot Defendants offer new\n factual and legal arguments in which they: (1) mischaracterize the SEC\u2019s allegations regarding\n O\u2019Rourke and Honig\u2019s shared office; and (2) incorrectly argue that the SEC\u2019s allegations cannot\n support Plaintiff\u2019s claims. I write to correct the Riot Defendants\u2019 new misstatements and to briefly\n respond to their uninvited legal arguments, which compel a response. Because we are mindful\n that any uninvited argument burdens the Court, we respectfully request that Your Honor considers\n this short response.\n\n\n\n\n 1\n The SEC\u2019s case against O\u2019Rourke and Honig is SEC v. Honig, No. 1:18-cv-08175 (S.D.N.Y.).\n\fCase 3:18-cv-02293-GC-RLS Document 246 Filed 10/11/22 Page 2 of 3 PageID: 10400\n\n\n\n\n Honorable Georgette Castner, U.S.D.J.\n October 11, 2022\n Page 2\n\n First, the Riot Defendants assert that the \u201callegations in SEC v. Honig . . . state that Honig\n and O\u2019Rourke shared an office at some unstated point in time\u201d and \u201cthe SEC does not allege when\n this sharing supposedly occurred and whether it was even during the relevant class period\u2014i.e.,\n March 15, 2017 to September 6, 2018.\u201d 10/7/22 Letter at 1-2. This is simply incorrect and\n misstates the SEC\u2019s allegations. The SEC\u2019s September 7, 2018 complaint alleged that \u201cHonig\n . . . currently works at an office in Boca Raton with . . . O\u2019Rourke\u201d (TAC Ex. A \u00b6 34), and that\n \u201cO'Rourke . . . currently works at an office . . . with Honig\u201d (id. \u00b6 36). Thus, as of September 7,\n 2018\u2014the day after the end of the Class Period\u2014O\u2019Rourke and Honig shared the same office.\n\n Likewise, the SEC\u2019s March 8, 2019 amended complaint (TAC Ex. B) alleged that\n \u201c[t]hroughout these stages, Honig . . . and O\u2019Rourke were in nearly daily contact because they\n worked out of the same office . . . .\u201d (TAC Ex. B \u00b6 56.) Thus, the SEC alleged that \u201cthroughout\n th[e] stages\u201d of the three pump-and-dump schemes, which the SEC alleged O\u2019Rourke and Honig\n \u201cperpetrated . . . from 2013 through 2018\u201d (see TAC \u00b6 49 (emphasis added); TAC Ex. A \u00b6 1)\u2014\n and up to and including September 7, 2018 (TAC Ex. A \u00b6\u00b6 34, 36)\u2014O\u2019Rourke and Honig worked\n out of the same office.\n\n The SEC\u2019s allegations corroborate CNBC\u2019s same conclusions. Specifically, on February\n 1, 2018, CNBC reporters travelled to Boca Raton to attend Riot\u2019s annual shareholder meeting but\n were told by the hotel that \u201cthere was never a meeting room ever booked under the name Riot\n Blockchain.\u201d (TAC \u00b6 132.) \u201cSo [the CNBC reporters] drove to [Honig\u2019s] nearby office building,\n trying to find Barry Honig.\u201d Id. \u201cWhen CNBC crew members walked into the office, they didn\u2019t\n find Honig, they found O\u2019Rourke,\u201d who \u201cquickly closed the door\u201d but then \u201cagreed to answer\n [CNBC\u2019s] questions via email instead.\u201d (TAC \u00b6 131-32.) \u201cOne of CNBC\u2019s first questions was\n whether [O\u2019Rourke] worked in the same office as Honig.\u201d (TAC \u00b6 131.) According to CNBC,\n O\u2019Rourke \u201cinsisted that he does not work out of Barry Honig\u2019s office.\u201d TAC\u00b6 132. Honig\n similarly told CNBC \u201cJohn O\u2019Rourke does not work out of my office\u201d but admitted that \u201cat one\n time John O\u2019Rourke had space in my office . . . we speak often.\u201d TAC \u00b6 131.\n\n The SEC\u2019s allegations that O\u2019Rourke and Honig worked out of the same office\n \u201cthroughout\u201d their schemes during 2013-2018 and as of September 7, 2018 (TAC Ex. A \u00b6\u00b6 1, 34,\n 36), together with CNBC\u2019s corroborating reporting that journalists found O\u2019Rourke and Honig\n together in that same shared office on February 1, 2018 (the day Riot abruptly cancelled its annual\n shareholder meeting) are important facts because they strongly support Plaintiff\u2019s allegation that\n O\u2019Rourke and Honig were in constant contact and working together with respect to Riot, just as\n they had for years at dozens of other companies, including the companies identified by the SEC as\n fraudulent pump-and-dump schemes (TAC \u00b6\u00b6 49-71), resulting in O\u2019Rourke and Honig being\n permanently barred from participating in any public offering of penny stock (TAC \u00b6\u00b6 69-70).\n\fCase 3:18-cv-02293-GC-RLS Document 246 Filed 10/11/22 Page 3 of 3 PageID: 10401\n\n\n\n\n Honorable Georgette Castner, U.S.D.J.\n October 11, 2022\n Page 3\n\n Second, the Riot Defendants cite an out-of-circuit case to question \u201cLead Plaintiff\u2019s ability\n to borrow allegations from the SEC\u2019s complaint in SEC v. Honig to support his claims.\u201d 10/7/22\n Letter at 2. But courts in the Third Circuit routinely permit plaintiffs to rely upon on allegations\n in government complaints. See, e.g., Lord Abbett Affiliated Fund, Inc. v. Navient Corp., 363 F.\n Supp. 3d 476, 493 (D. Del. 2019) (permitting plaintiff to \u201cincorporat[e] allegations from\n government complaints filed in other cases\u201d and crediting plaintiff\u2019s use of \u201cspecific factual\n allegations in the government complaint, which must under Fed. R. Civ. P. 11 be based on a\n reasonable inquiry, to corroborate similar factual allegations in its own complaint\u201d); In re Navient\n Corp. Sec. Litig., 2019 WL 7288881, at *8 (D.N.J. Dec. 30, 2019) (\u201cThe reasoning in Lord Abbett\n is both persuasive and directly on point here. Accordingly, the Court will not discount the factual\n assertions in the Complaint that rely on allegations contained in government complaints.\u201d).\n\n\n Respectfully,\n\n /s/ Joseph J. DePalma\n\n Joseph J. DePalma\n\n\n JJD:emp\n\n cc: All Counsel of Record (via ECF)\n\f","ocr_status":2,"date_upload":"2023-03-06T03:15:02.150159-08:00","document_number":"246","attachment_number":null,"pacer_doc_id":"119019159878","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2022-10-11T14:37:41.609787-07:00","date_modified":"2026-06-16T08:51:14.742813-07:00","date_filed":"2022-10-11","time_filed":null,"entry_number":246,"recap_sequence_number":"2022-10-11.001","pacer_sequence_number":896,"description":"Letter from Joseph J. DePalma to the Honorable Georgette Castner, U.S.D.J. (DEPALMA, JOSEPH) (Entered: 10/11/2022)","tags":[]}],"entries_total":"https://www.courtlistener.com/api/rest/v4/docket-entries/?count=on&docket=6313843&page_size=40"}