{"cached_at":"2026-10-31T10:44:12.052271+00:00","cl_docket_id":"18453599","docket":{"resource_uri":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","id":18453599,"court":"https://www.courtlistener.com/api/rest/v4/courts/nysd/","court_id":"nysd","original_court_info":null,"idb_data":null,"clusters":["https://www.courtlistener.com/api/rest/v4/clusters/9886582/"],"audio_files":[],"assigned_to":"https://www.courtlistener.com/api/rest/v4/people/3095/","referred_to":null,"bankruptcy_information":null,"absolute_url":"/docket/18453599/brown-v-qutoutiao-inc/","date_created":"2020-09-18T12:03:49.708528-07:00","date_modified":"2026-06-17T04:16:31.493195-07:00","source":1,"appeal_from_str":"","assigned_to_str":"Sidney H. 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Tan","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/10405884/","id":10405884,"attorneys":[],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","docket_id":18453599,"name":"Defendant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2021-02-14T18:39:10.007107-08:00","date_modified":"2021-02-14T18:39:10.007147-08:00","name":"Qutoutiao Inc.","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/10405883/","id":10405883,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/6810832/","attorney_id":6810832,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","docket_id":18453599,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/6810833/","attorney_id":6810833,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","docket_id":18453599,"role":1}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","docket_id":18453599,"name":"Plaintiff","date_terminated":null,"extra_info":"individually and on behalf of all others similarly 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Brown","extra_info":""}],"entries":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/452882684/","id":452882684,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/467760417/","id":467760417,"tags":[],"absolute_url":"/docket/18453599/28/brown-v-qutoutiao-inc/","date_created":"2026-02-05T13:11:57.162490-08:00","date_modified":"2026-06-18T11:09:27.802751-07:00","sha1":"9e80e0eb3e0329a5a8489f20af79c4fb0c854c6e","page_count":51,"file_size":333344,"filepath_local":"recap/gov.uscourts.nysd.544615/gov.uscourts.nysd.544615.28.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.544615/gov.uscourts.nysd.544615.28.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 1:20-cv-06707-VM      Document 144   Filed 02/05/26   Page 1 of 51\n\n\n\nUNITED STATES DISTRICT COURT\nSOUTHERN DISTRICT OF NEW YORK\n                                                                      2/5/2026\n\n                                                     20 Cv. 6707 (VM)\n    IN RE QUTOUTIAO, INC. SECURITIES\n    LITIGATION                                       DECISION AND ORDER\n\n\n\n\n    THIS DOCUMENT RELATES TO ALL ACTIONS\n\n\nVICTOR MARRERO, United States District Judge.\n\n        Lead   Plaintiff     James   Pappas1   (\u201cPlaintiff\u201d      or   \u201cLead\n\nPlaintiff\u201d) brought this consolidated class action against\n\nQutoutiao, Inc. (\u201cQTT\u201d or the \u201cCompany\u201d), its officers and\n\ndirectors2 (the \u201cIndividual Defendants,\u201d and together with\n\nQTT, the \u201cCompany Defendants\u201d), and its underwriters3 (the\n\n\n1 The Court notes that on July 8, 2025, Lead Counsel for the Class filed\n\na suggestion of death providing notice that Lead Plaintiff James Pappas\nhad died. (See Dkt. No. 129.). Following this notice, the Parties\nexchanged pre-motion letters regarding Lead Counsel\u2019s anticipated motion\nto substitute Rosemary Korines pursuant to Federal Rule of Civil Procedure\n25(a) (Dkt. Nos. 130-134). On August 18, 2025, the Court issued a Joint\nStipulation and Order pursuant to which the Parties stipulated that\nDefendants would withdraw their letter opposition to the pre-motion letter\nseeking the substitution of Rosemary Korines, the executor of James\nPappas\u2019 estate, as Lead Plaintiff. (Dkt. No. 142.) Courts in this Circuit\nhave allowed the \u201csubstitution of a deceased shareholder-plaintiff by the\nexecutors of his estate in a derivative action, holding that the executors\nwould possess \u2018shareholder\u2019 standing as long as the decedent did because\nany shares owned by the decedent \u2018passed into [his] estate by operation\nof law.\u2019\u201d Roe v. City of New York, No. 00-CV-9062, 2003 WL 22715832, at\n*3 (S.D.N.Y. Nov. 19, 2003) (quoting Saylor v. Bastedo, 623 F.2d 230,\n237-38 (2d Cir. 1980)).\n2 The Individual Defendants are Eric Tan (\u201cTan\u201d), Lei Li (\u201cL. Li\u201d), Jingbo\n\nWang (\u201cWang\u201d), Shaoqing Jiang (\u201cJiang\u201d), Jianfei Dong (\u201cDong\u201d), Oliver\nYucheng Chen (\u201cChen\u201d), Yongbo Dai (\u201cDai\u201d), James Jun Peng (\u201cPeng\u201d), and\nFeng Li (\u201cF. Li\u201d).\n3  The Underwriter Defendants are Citigroup Global Markets Inc.\n(\u201cCitigroup\u201d), Deutsche Bank Securities Inc. (\u201cDeutsche Bank\u201d), China\nMerchants Securities (HK) Co., Ltd. (\u201cChina Merchants\u201d), UBS Securities\n\n\n                                     1\n\fCase 1:20-cv-06707-VM     Document 144     Filed 02/05/26   Page 2 of 51\n\n\n\n\u201cUnderwriter    Defendants,\u201d         and   together    with      the   Company\n\nDefendants, the \u201cDefendants\u201d). Plaintiff, an investor in QTT,\n\nasserts    claims   under      the    Securities      Act   of    1933     (the\n\n\u201cSecurities Act\u201d) for alleged misstatements and omissions in\n\nconnection with QTT\u2019s initial public offering (\u201cIPO\u201d) in\n\nSeptember 2018 and its secondary public offering (\u201cSPO,\u201d and\n\ntogether with the IPO the \u201cOfferings\u201d) in April 2019. (See\n\nDkt.   No.   118    [hereafter       \u201cSecond    Amended     Complaint\u201d      or\n\n\u201cSAC\u201d].)\n\n       Defendants       QTT,   the     Individual       Defendants,         and\n\nCitigroup, Deutsche Bank, China Merchants, UBS, Keybanc, and\n\nJefferies now move to dismiss the Second Amended Complaint in\n\nits entirety for failure to state a claim pursuant to Federal\n\nRule of Civil Procedure 12(b)(6) (\u201cRule 12(b)(6)\u201d). (See Dkt.\n\nNo. 122 [hereafter the \u201cMotion\u201d or \u201cMot.\u201d].)4 For the reasons\n\ndiscussed below, Defendants\u2019 Motion is GRANTED.\n\n\n\n\nLLC (\u201cUBS\u201d), Keybanc Capital Markets, Inc. (\u201cKeybanc\u201d), CLSA Limited\n(\u201cCLSA\u201d), Haitong International Securities Company Limited (\u201cHaitong\u201d),\nJefferies Group LLC (\u201cJefferies\u201d), and Lighthouse Capital International\nInc. (\u201cLighthouse\u201d).\n4 Three of the Underwriter Defendants, specifically, CLSA, Haitong, and\nLighthouse, entered into stipulations with Plaintiff preserving their\nright to move to dismiss on other grounds if the Court denies this Motion\nin whole or in part. (See Dkt. No. 121.) They did not join this Motion.\n\n\n\n                                      2\n\fCase 1:20-cv-06707-VM      Document 144         Filed 02/05/26        Page 3 of 51\n\n\n\n                             I.     BACKGROUND5\n\n       A.   FACTUAL BACKGROUND\n\n       QTT operates mobile content platforms that distribute\n\nand share entertainment content in China. The QTT smartphone\n\napplication (\u201cQTT App\u201d) aggregates articles and short videos\n\nfrom professional media and freelancers and presents this\n\ncontent in a customized feed for users. QTT generates the\n\nmajority of its revenue by selling advertisements on its\n\nmobile platforms. QTT\u2019s business model targeted consumers who\n\nlived in smaller, provincial cities in China \u2013 known as lower\n\ntier    cities   \u2013   purportedly          because      this      underserved         but\n\ngrowing market had increasing disposable income and spent\n\nmore time on the internet.\n\n        Initially, QTT\u2019s advertising business relied primarily\n\non     third-party        advertising          platforms         to      sell     QTT\u2019s\n\nadvertising      spaces.     For    example,        Baidu,       another        Chinese\n\ninternet    company,       helped        QTT    sell     a    large       volume      of\n\nadvertisements       in    2016    and    2017.     In   February          2018,     QTT\n\nacquired Dianguan, an advertising agent, for approximately\n\n\n\n\n5The following facts are taken from Plaintiff\u2019s Second Amended Complaint,\nwhich the Court must take as true for the purpose of resolving Defendants\u2019\nmotion to dismiss. See Safka Holdings LLC v. iPlay, Inc., 42 F. Supp. 3d\n488, 491 (S.D.N.Y. 2013). Where indicated, the Complaint\u2019s factual\nallegations are supplemented by facts and information drawn from documents\nappended to the Complaint, which are properly before the Court. See\nTannerite Sports, LLC v. NBCUniversal Media LLC, 135 F. Supp. 3d 219, 225\nn.1 (S.D.N.Y. 2015).\n\n\n\n                                          3\n\fCase 1:20-cv-06707-VM   Document 144      Filed 02/05/26   Page 4 of 51\n\n\n\n$2.3 million. QTT subsequently combined Dianguan\u2019s existing\n\ntechnology and its own resources into an in-house advertising\n\nplatform and reduced its reliance on third-party platforms\n\nlike Baidu.\n\n      On September 14, 2018, QTT announced its IPO of 12\n\nmillion American Depository Shares (\u201cADS\u201d) at a price of $7.00\n\nper   share.   On    September    11,   2018,    QTT   filed      its    final\n\namendment to the IPO Registration Statement with the SEC on\n\nForm F-1/A, which was declared effective on September 13,\n\n2018. On September 14, 2018, QTT filed its prospectus on Form\n\n424B (\u201cIPO Prospectus\u201d and together with IPO Registration\n\nStatement, the \u201cIPO Offering Documents\u201d). QTT closed its IPO\n\nin September 2018.\n\n      On March 29, 2019, QTT announced an SPO of 10 million\n\nQTT ADSs at a price of $10.00 per share. On April 1, 2019,\n\nQTT   filed    its   first   and    final     amendment      to    its    SPO\n\nRegistration    Statement    on    Form    F-1/A    (\u201cSPO    Registration\n\nStatement\u201d), which was declared effective shortly thereafter.\n\nOn April 3, 2019, QTT filed its SPO Prospectus on Form 424B4\n\nwith the SEC. The SPO closed in April 2019 (\u201cSPO Prospectus,\u201d\n\nand together with the SPO Registration Statement, the \u201cSPO\n\nOffering Documents\u201d).\n\n      On July 15, 2020, China Central Television (\u201cCCTV\u201d),\n\nChina\u2019s state-controlled broadcaster, reported that certain\n\n\n                                    4\n\fCase 1:20-cv-06707-VM   Document 144    Filed 02/05/26    Page 5 of 51\n\n\n\nadvertisements placed by third-party advertising agents on\n\nQTT\u2019s platform were improper (the \u201cCCTV Report\u201d). As a result\n\nof the CCTV Report, the price of the QTT\u2019s ADSs fell by more\n\nthan 24 percent and the QTT App was temporarily removed from\n\nseveral major app stores in China for two weeks, although the\n\nQTT App was still available to existing users. In response,\n\nQTT enacted several remedial measures to identify and remove\n\nproblematic     advertisements.    On    December        16,   2020,     QTT\n\nreported a revenue decline for the third quarter of 2020,\n\nwith a 19.7 percent decline in year-over-year revenue and a\n\n23.1 percent decline in advertising revenue. These third\n\nquarter 2020 financials allegedly triggered a significant\n\nshare price decline.\n\n      B.    THE PARTIES\n\n      Plaintiff purchased ADSs in September 2018 pursuant or\n\ntraceable to QTT\u2019s IPO and alleges he suffered damages arising\n\nfrom federal securities law violations.\n\n      The SAC names three types of defendants. The first is\n\nthe company QTT. The second are the Individual Defendants,\n\nwho are current or former employees of QTT. The third are the\n\nUnderwriter Defendants who underwrote either QTT\u2019s IPO or\n\nSPO, or both.\n\n      The SAC names nine Individual Defendants, each of whom\n\nallegedly participated in the preparation of, signed and/or\n\n\n                                  5\n\fCase 1:20-cv-06707-VM    Document 144     Filed 02/05/26   Page 6 of 51\n\n\n\nauthorized the signing of QTT\u2019s IPO and/or SPO documents.\n\nSpecifically, the SAC names: (1) Tan, QTT\u2019s co-founder and\n\nits Chief Executive Officer (\u201cCEO\u201d) since May 20, 2019; (2)\n\nL. Li, QTT\u2019s co-founder and CEO until May 2019 when he\n\nresigned from the Company; (3) Wang, a director at QTT and\n\nthe Company\u2019s Chief Financial Officer (\u201cCFO\u201d) until January\n\n22, 2020; (4) Jiang, a director of QTT and a member of its\n\nAudit Committee and Compensation Committee until September\n\n13, 2019; (5) Dong, a director of QTT and Co-President of\n\nQTT; (6) Chen, a director of QTT and QTT\u2019s Chief Strategy\n\nOfficer from August 2018 to February 2020; (7) Dai, a director\n\nof QTT beginning in November 2018; (8) Peng, a director of\n\nQTT, a member of its Audit Committee and Nominating and\n\nCorporate Governance Committee, and Chair of the Compensation\n\nCommittee; and (9) F. Li, a director of QTT.\n\n      Lastly,   the     SAC   names   nine    Underwriter     Defendants,\n\nspecifically: (1) Citigroup, a multinational investment bank\n\nand financial services corporation who served as underwriter\n\nfor QTT\u2019s IPO and SPO; (2) Deutsche Bank, a financial services\n\ninstitution that served as underwriter to QTT\u2019s IPO and SPO;\n\n(3) China Merchants, a China-based financial services company\n\nthat served as underwriter for QTT\u2019s IPO; (4) UBS, which\n\nprovides   investment     banking     and    financial     services,      and\n\nserved as an underwriter for QTT\u2019s IPO; (5) Keybanc, which\n\n\n                                      6\n\fCase 1:20-cv-06707-VM   Document 144      Filed 02/05/26   Page 7 of 51\n\n\n\nprovides   investment    advisory       services,    and     served   as   an\n\nunderwriter for QTT\u2019s IPO; (6) CLSA, a capital markets and\n\ninvestment group that served as an underwriter for QTT\u2019s SPO;\n\n(7) Haitong, an international financial institution that\n\nserved as an underwriter for QTT\u2019s SPO; (8) Jefferies, an\n\ninvestment banking firm that served as underwriter for QTT\u2019s\n\nSPO; and (9) Lighthouse, a boutique investment bank that\n\nserved as underwriter for QTT\u2019s SPO.\n\n      C.    PROCEDURAL HISTORY\n\n      On August 20, 2020, Plaintiff initiated this action\n\nagainst    QTT   and    multiple        individual     and     underwriter\n\ndefendants, bringing claims alleging violations of Sections\n\n11 (\u201cSection 11\u201d) and 15 (\u201cSection 15\u201d) of the Securities\n\nAct, and Sections 10(b) and (20)(a) of the Securities Exchange\n\nAct of 1934 (the \u201cExchange Act\u201d).6 (See Dkt. No. 1.) On\n\nNovember 4, 2020, Judge Sidney Stein, who originally presided\n\nover this action, consolidated this case with action No. 20-\n\nCV-7717 and named James Pappas as lead plaintiff. (See Dkt.\n\nNo. 22.) On January 15, 2021, Plaintiff filed an Amended\n\nComplaint, which added claims alleging violations of Section\n\n\n\n\n6 Specifically, the individual defendants were Tan, L. Li, Wang, Jiang,\nDong, and Chen. The underwriter defendants were China Merchants,\nCitigroup, Deutsche, KeyBanc, and UBS.\n\n\n\n                                    7\n\fCase 1:20-cv-06707-VM        Document 144      Filed 02/05/26   Page 8 of 51\n\n\n\n12(a)(2) (\u201cSection 12(a)(2)\u201d) of the Securities Act. (See\n\nDkt. No. 41.)\n\n        On March 16, 2021, Defendants moved to dismiss the\n\nAmended Complaint under Rule 12(b)(6) for failure to state a\n\nclaim. (See Dkt. Nos. 49, 53.) On August 3, 2023, Judge Stein\n\nruled    in    favor    of    Defendants      and    dismissed       the   Amended\n\nComplaint in its entirety. (See Dkt. No. 108.) Judge Stein\n\nconcluded that Plaintiff had not adequately pleaded that\n\nDefendants had made misstatements or omissions of material\n\nfact in violation of the Exchange Act. (See id.) Judge Stein\n\nalso found that Plaintiff\u2019s Securities Act claims sounded in\n\nfraud and thus were subject to a heightened pleading standard\n\nunder Federal Rule of Civil Procedure Rule 9(b) (\u201cRule 9(b)\u201d).\n\n(See    id.)   Applying       the    Rule     9(b)   standard,       Judge   Stein\n\ndismissed      the     Securities     Act     claims    because      Plaintiff\u2019s\n\nallegations were not pleaded with sufficient particularity as\n\nto each Defendant. (See id.)\n\n        Plaintiff appealed only the dismissal of the Securities\n\nAct claims, arguing that Judge Stein erred in applying the\n\nRule 9(b) pleading standard. The Second Circuit agreed and\n\nvacated the district court\u2019s dismissal of the Securities Act\n\nclaims. (See Dkt. No. 113.) The Second Circuit explained that\n\nPlaintiff\u2019s      Securities         Act   claims     sounded    in    negligence\n\nrather than fraud and thus were subject to review under the\n\n\n                                          8\n\fCase 1:20-cv-06707-VM   Document 144     Filed 02/05/26    Page 9 of 51\n\n\n\nRule    8(a)   notice    pleading       standard,    not     Rule    9(b)\u2019s\n\nheightened pleading standard. (See id.) The Second Circuit\n\ndeclined to address whether Plaintiff\u2019s Securities Act claims\n\nwere sufficiently pleaded under Rule 8(a) and stated that the\n\nparties\u2019   other    arguments    remained     available      to     them   on\n\nremand. (See id.)\n\n       On remand, this action was reassigned to this Court.\n\nPlaintiff subsequently filed the Second Amended Complaint,\n\nbringing claims under Sections 11, 12(a)(2), and 15 of the\n\nSecurities Act, and no longer asserting claims under the\n\nExchange Act. Defendants filed their motion to dismiss7 with\n\nan accompanying memorandum of law, (\u201cDefs.\u2019 Mem.,\u201d Dkt. No.\n\n123), to which Plaintiff filed an opposition, (\u201cPl.\u2019s Opp\u2019n,\u201d\n\nDkt. No. 131) and Defendants filed a reply (\u201cDefs.\u2019 Reply,\u201d\n\nDkt. No. 143).\n\n\n\n\n7 In support of their motion to dismiss, Defendants filed a declaration\nwith multiple documents included as exhibits, including excerpts of SEC\nfilings and a Wolfpack Research Report. (See Dkt. No. 124.) The Court\ntakes judicial notice of these documents as matters properly considered\nat the pleading stage. See ATSI Commc\u2019ns, Inc. v. Shaar Fund, Ltd., 493\nF.3d 87, 98 (2d Cir. 2007) (\u201c[W]e may consider any written instrument\nattached to the complaint, statements or documents incorporated into the\ncomplaint by reference, legally required public disclosure documents\nfiled with the SEC, and documents possessed by or known to the plaintiff\nand upon which it relied in bringing the suit.\u201d); Staehr v. Hartford Fin.\nServs. Grp., Inc., 547 F.3d 406, 425 (2d Cir. 2008) (\u201c[I]t is proper to\ntake judicial notice of the fact that press coverage, prior lawsuits, or\nregulatory filings contained certain information, without regard to the\ntruth of their contents.\u201d).\n\n\n\n                                    9\n\fCase 1:20-cv-06707-VM     Document 144      Filed 02/05/26   Page 10 of 51\n\n\n\n                         II.   STANDARD OF REVIEW\n\n         \u201cTo survive a motion to dismiss, a complaint must contain\n\n sufficient factual matter, accepted as true, to \u2018state a claim\n\n to relief that is plausible on its face.\u2019\u201d Ashcroft v. Iqbal,\n\n 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,\n\n 550 U.S. 544, 570 (2007)). A claim is plausible if the\n\n complaint     states    \u201c\u2018enough    fact      to    raise    a   reasonable\n\n expectation that discovery will reveal evidence of illegal\u2019\n\n conduct\u201d \u2014 there is not \u201ca probability requirement at the\n\n pleading stage.\u201d Lynch v. City of New York, 952 F.3d 67, 75\n\n (2d Cir. 2020) (quoting Twombly, 550 U.S. at 556); see Iqbal,\n\n 556 U.S. at 678 (\u201cA claim has facial plausibility when the\n\n plaintiff pleads factual content that allows the court to\n\n draw the reasonable inference that the defendant is liable\n\n for the misconduct alleged.\u201d). \u201cIn other words, a complaint\n\n should     not   be    dismissed    when     the    factual      allegations\n\n sufficiently \u2018raise a right to relief above the speculative\n\n level.\u2019\u201d Liboy v. Russ, No. 22-CV-10334, 2023 WL 6386889, at\n\n *4 (S.D.N.Y. Sept. 29, 2023) (quoting Twombly, 550 U.S. at\n\n 555).\n\n         In reviewing a motion to dismiss under Rule 12(b)(6),\n\n the Court must \u201cconstru[e] the complaint liberally, accepting\n\n all factual allegations in the complaint as true, and drawing\n\n all     reasonable     inferences    in      the    plaintiff\u2019s      favor.\u201d\n\n\n                                     10\n\fCase 1:20-cv-06707-VM    Document 144     Filed 02/05/26   Page 11 of 51\n\n\n\n Goldstein v. Pataki, 516 F.3d 50, 56 (2d Cir. 2008) (citation\n\n omitted). The Court may also \u201cconsider documents attached to\n\n the pleadings, documents referenced in the pleadings, or\n\n documents that are integral to the pleadings in order to\n\n determine if a complaint should survive a [Rule] 12(b)(6)\n\n motion.\u201d Garcia v. Lewis, No. 05-CV-1153, 2005 WL 1423253, *3\n\n (S.D.N.Y. June 16, 2005); see also ATSI Commc\u2019ns, Inc. v.\n\n Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (\u201c[W]e may\n\n consider any written instrument attached to the complaint,\n\n statements or documents incorporated into the complaint by\n\n reference, legally required public disclosure documents filed\n\n with the SEC, and documents possessed by or known to the\n\n plaintiff and upon which it relied in bringing the suit.\u201d).\n\n                            III. DISCUSSION\n\n      Plaintiff brings Counts I, II, and III under Sections\n\n 11, 12(a)(2), and 15 of the Securities Act, respectively.\n\n (See SAC \u00b6\u00b6 137-65.) Plaintiff argues that QTT\u2019s IPO Offering\n\n Documents   and   SPO    Offering      Documents     (collectively        the\n\n \u201cOffering Documents\u201d) contained material misstatements and\n\n omissions of fact that caused financial losses to Plaintiff\n\n and other investors. Plaintiff\u2019s allegations regarding such\n\n misstatements and omissions of material fact generally fall\n\n into the following categories: (1) QTT misrepresented that it\n\n had an effective screening program to prevent the placement\n\n\n                                     11\n\fCase 1:20-cv-06707-VM      Document 144     Filed 02/05/26     Page 12 of 51\n\n\n\n of illegal advertisements on the QTT app, including the use\n\n of artificial intelligence to screen advertisements (id. \u00b6\u00b6\n\n 107-08, 122); (2) QTT omitted from the Offering Documents\n\n that it was actively placing a material amount of illegal\n\n advertisements on the QTT app at the time of the IPO and SPO\n\n (id. \u00b6\u00b6 109-11, 125-27); (3) a material amount of QTT\u2019s\n\n revenue      growth   came    from    placing     illegal     advertisements\n\n rather than from a strategy of targeting underserved users in\n\n lower tier cities (id. \u00b6\u00b6 8, 99-101, 116-17); and (4) QTT\n\n failed to disclose certain related party transactions (id. \u00b6\u00b6\n\n 48-66).\n\n        In response, Defendants argue that: (1) Plaintiff does\n\n not have statutory standing to bring a claim under Section 11\n\n as to the SPO and Section 12(a)(2); and (2) Plaintiff has\n\n failed to state a claim under the Securities Act because none\n\n of     the   challenged      statements     are       materially    false     or\n\n misleading. (See Defs.\u2019 Mem. at 1-4.)\n\n        Regarding standing, the Court finds that while Plaintiff\n\n does have standing to bring his claims against the Defendants\n\n involved in the IPO, he does not have Article III standing to\n\n bring his claims against the Defendants involved only in the\n\n SPO. Additionally, the Court finds that Plaintiff does not\n\n have    statutory     standing   to    bring      a   claim   under    Section\n\n 12(a)(2). Addressing the substance of Plaintiff\u2019s claims, the\n\n\n                                       12\n\fCase 1:20-cv-06707-VM   Document 144    Filed 02/05/26   Page 13 of 51\n\n\n\n Court finds that Plaintiff has failed to state a claim under\n\n the Securities Act because none of the challenged statements\n\n are materially false or misleading. Accordingly, for the\n\n reasons discussed below, the Court will grant Defendants\u2019\n\n Motion.\n\n      A.    STANDING\n\n      Defendants argue that Plaintiff does not have statutory\n\n standing to bring a claim under Section 11 as to the SPO and\n\n Section   12(a)(2).    (See   Defs.\u2019   Mem.   at   25-27.)    Plaintiff\n\n argues that he has standing to bring all the claims asserted\n\n in this action and that the law of the case doctrine prevents\n\n this Court from reconsidering Judge Stein\u2019s prior holding\n\n that Plaintiff had standing. (See Pl.\u2019s Opp\u2019n at 24-25.)\n\n      As an initial matter, the \u201c[l]aw of the case doctrine is\n\n prudential and discretionary in character, and courts \u2018always\n\n [have] the power to change a ruling\u201d in light of \u2018further\n\n reflection[.]\u2019\u201d Laurent v. PricewaterhouseCoopers LLP, 963 F.\n\n Supp. 2d 310, 314 (S.D.N.Y. 2013) (quoting Corporacion de\n\n Mercadeo Agricola v. Mellon Bank Int\u2019l, 608 F.2d 43, 48 (2d\n\n Cir.1979) (internal citations omitted); see also American\n\n Hotel Int\u2019l Grp., Inc. v. OneBeacon Ins. Co., 611 F. Supp. 2d\n\n 373, 379 (S.D.N.Y. 2009), aff\u2019d, 374 F. App\u2019x 71 (2d Cir.\n\n 2010) (\u201c[W]hen an appellate court does not address an issue\n\n that a trial court decided, the trial court on remand has the\n\n\n                                  13\n\fCase 1:20-cv-06707-VM       Document 144        Filed 02/05/26    Page 14 of 51\n\n\n\n discretion to determine whether its prior determination on an\n\n issue should be disturbed.\u201d).\n\n        In this matter, the Second Circuit explicitly stated\n\n that    it    did   \u201cnot    reach       the    parties\u2019    other     arguments,\u201d\n\n including arguments as to standing, \u201call of which remain\n\n available to them on remand.\u201d (Dkt. No. 113 at 8.) Given the\n\n discretionary nature of the law of the case doctrine and the\n\n Second Circuit\u2019s implication that the standing argument would\n\n remain       available     on     remand,       the    Court      will     address\n\n Defendants\u2019         arguments      regarding          Plaintiff\u2019s        standing,\n\n beginning with whether Plaintiff has standing to bring the\n\n Section 11 claim as to the SPO.\n\n               1.     Standing for the Section 11 Claim\n\n        Regarding standing to assert the Section 11 claim as to\n\n the    SPO,    Defendants       argue    the    Plaintiff       lacks    statutory\n\n standing because he cannot trace his shares to the SPO. (See\n\n Defs.\u2019 Mem. at 25-27.) Specifically, Defendants contend that\n\n because Plaintiff purchased his QTT shares in September 2018,\n\n six months before the April 2019 SPO, his shares are not\n\n traceable to that SPO, as is required to claim statutory\n\n standing under Section 11. (See id.) Plaintiff argues that\n\n under Federal Rule of Civil Procedure 23 (\u201cRule 23\u201d), a\n\n plaintiff can litigate injuries on behalf of putative class\n\n members. (See Pl.\u2019s Opp\u2019n at 24-25.)\n\n\n                                          14\n\fCase 1:20-cv-06707-VM   Document 144    Filed 02/05/26    Page 15 of 51\n\n\n\n       In making these arguments, Plaintiff and Defendants\n\n appear to be speaking past one another. Defendants\u2019 argument\n\n concerns whether Plaintiff has statutory standing, while\n\n Plaintiff\u2019s     argument   that   Rule      23   gives    him    standing\n\n implicates the distinct concept of class action standing. To\n\n properly address the standing issue, and before turning to\n\n statutory standing, the Court will first analyze whether\n\n Plaintiff has sufficiently established Article III standing\n\n and the related concept of class standing.\n\n                  a. Article III Standing\n\n       \u201cThe   \u2018threshold    question    in   every   federal     case\u2019     is\n\n \u2018whether the plaintiff has made out a case or controversy\n\n between [themselves] and the defendant within the meaning of\n\n [Article] III.\u201d Won v. Amazon.com Servs. LLC, No. 21-CV-2867,\n\n 2025 WL 2962616, at *5 (E.D.N.Y. Oct. 21, 2025) (quoting\n\n Denney v. Deutsche Bank AG, 443 F.3d 253, 263 (2d Cir. 2006)).\n\n Article III \u201c[s]tanding in the class action context requires\n\n a bifurcated inquiry.\u201d Petrosino v. Stearn\u2019s Prod., Inc., No.\n\n 16-CV-7735, 2018 WL 1614349, at *5 (S.D.N.Y. Mar. 30, 2018).\n\n As part of this bifurcated inquiry, courts in this Circuit\n\n first examine whether the individual plaintiff has satisfied\n\n the   minimum    requirements     of   \u201ctraditional\u201d       Article       III\n\n standing before determining whether the plaintiff has class\n\n\n\n\n                                   15\n\fCase 1:20-cv-06707-VM    Document 144    Filed 02/05/26   Page 16 of 51\n\n\n\n standing.   See   id.   (\u201cFirst,   Plaintiff      must   establish       the\n\n minimum requirements of Article III standing[.]\u201d).\n\n      To establish \u201ctraditional\u201d Article III standing, an\n\n individual plaintiff must have \u201c(1) suffered an injury in\n\n fact, (2) that is fairly traceable to the challenged conduct\n\n of the defendant, and (3) that is likely to be redressed by\n\n a favorable judicial decision.\u201d Spokeo, Inc. v. Robins, 578\n\n U.S. 330, 338 (2016), as revised (May 24, 2016) (citing Lujan\n\n v. Defenders of Wildlife, 504 U.S. 555, 560\u201361 (1992)). \u201cIn\n\n the context of class actions, Article III standing requires\n\n that \u2018for every named defendant there must be at least one\n\n named plaintiff who can assert a claim directly against that\n\n defendant.\u2019\u201d Youngers v. Virtus Inv. Partners Inc., 195 F.\n\n Supp. 3d 499, 510 (S.D.N.Y. 2016) (quoting NECA-IBEW Health\n\n & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145, 159 (2d\n\n Cir. 2012)). If that requirement is satisfied, the inquiry\n\n shifts to a class standing analysis. See Point12 Diversified\n\n Fund, LP v. TMC The Metals Co., No. 21-CV-5991, 2025 WL\n\n 1920340, at *9 (E.D.N.Y. July 11, 2025) (\u201cIn putative class\n\n actions, the standing analysis does not stop there. After\n\n \u2018traditional\u2019 Article III standing has been established,\n\n [courts] consider \u2018class standing\u2019 \u2014 that is, the named\n\n plaintiff[\u2018s]\n\n\n\n\n                                    16\n\fCase 1:20-cv-06707-VM         Document 144       Filed 02/05/26        Page 17 of 51\n\n\n\n ability (and incentive) to press the claims of absent class\n\n members.\u201d)\n\n       Here, the Plaintiff can satisfy \u201ctraditional\u201d Article\n\n III standing for the Section 11 claim for some, but not all\n\n Defendants.       Plaintiff        plausibly      alleges        a    monetary        loss\n\n caused by his investment in QTT securities that could be\n\n redressed through rights of action for damages under Section\n\n 11. However, for causation, his injury is fairly traceable\n\n only to the alleged misstatements and omissions by Defendants\n\n involved     in   the    IPO.      Plaintiff      purchased           QTT   securities\n\n related to the IPO only in September 2018. Therefore, his\n\n injury   can      be    \u201cfairly     traceable\u201d        only       to     the   material\n\n misstatements and omissions made by the Defendants involved\n\n in the IPO. Spokeo, 578 U.S. at 338. Since Plaintiff did not\n\n purchase shares of the SPO, which took place months later in\n\n April 2019, his injury could not have been caused by the\n\n material misstatements and omissions made only by Defendants\n\n involved in the SPO.\n\n       Therefore, while Plaintiff has Article III standing to\n\n pursue claims against Defendants involved in the IPO, he does\n\n not   have   Article         III   standing      to   pursue         claims    against\n\n Defendants who were involved only in the SPO. Because \u201cfor\n\n every named defendant there must be at least one named\n\n plaintiff     who      can   assert    a    claim     directly          against       that\n\n\n                                            17\n\fCase 1:20-cv-06707-VM   Document 144   Filed 02/05/26   Page 18 of 51\n\n\n\n defendant,\u201d the Section 11 claims must be dismissed as to the\n\n Defendants who were involved only in the SPO. See NECA, 693\n\n F.3d at 159 (quoting Cent. States Se. & Sw. Areas Health &\n\n Welfare Fund v. Merck\u2013Medco Managed Care, L.L.C., 504 F.3d\n\n 229, 241 (2d Cir. 2007)). Specifically, Plaintiff does not\n\n have standing against the individuals Dai, Peng, and F. Li,\n\n and underwriters Haitong, Jefferies, CLSA, and Lighthouse\n\n since these defendants were alleged to be involved only in\n\n the SPO and had no involvement in the IPO in which Plaintiff\n\n actually purchased shares. (See SAC \u00b6\u00b6 23-47.) The remaining\n\n Defendants are those who had involvement in the IPO, which\n\n includes some Defendants who were involved in both the IPO\n\n and SPO Offerings. Because this litigation entails a class\n\n action, the next step in the bifurcated Article III standing\n\n inquiry is to address class standing as to the remaining\n\n Defendants.\n\n                  b. Class Standing\n\n      \u201cAfter   \u2018traditional\u2019     Article    III   standing     has      been\n\n established, [courts] consider \u2018class standing\u2019 \u2014 that is,\n\n the named plaintiff[\u2018s] ability (and incentive) to press the\n\n claims of absent class members.\u201d Point12 Diversified Fund,\n\n 2025 WL 1920340, at *9. Through class standing a \u201cnamed\n\n plaintiff may bring claims on behalf of unnamed class members\n\n for a different violation of the same statute upon which the\n\n\n                                  18\n\fCase 1:20-cv-06707-VM         Document 144   Filed 02/05/26    Page 19 of 51\n\n\n\n named plaintiff rests his claims if that plaintiff \u2018plausibly\n\n alleges (1) that he personally has suffered some actual injury\n\n as   a    result      of    the   putatively    illegal      conduct   of      the\n\n defendant, and (2) that such conduct implicates the same set\n\n of concerns as the conduct alleged to have caused injury to\n\n other members of the putative class by the same defendants.\u2019\u201d\n\n Lozada v. TaskUs, Inc., 710 F. Supp. 3d 283, 312\u201313 (S.D.N.Y.\n\n 2024) (quoting NECA, 693 F.3d at 162). \u201cConduct \u2018implicates\n\n the same set of concerns\u2019 when the conduct that injured the\n\n named plaintiff and the conduct that injured the absent class\n\n members can be proven in a similar way\u201d against the same\n\n defendants. In re Bibox Grp. Holdings Ltd. Sec. Litig., 534\n\n F. Supp. 3d 326, 335 (S.D.N.Y. 2021) (quoting NECA, 693 F.3d\n\n at 163).\n\n          Here,   as        discussed   above,    it    has     already        been\n\n established that Plaintiff has Article III standing as to a\n\n Section 11 claim for the defendants involved in the IPO, but\n\n not for those involved in the SPO. However, some of these\n\n Defendants involved in the IPO were also involved in the SPO.\n\n Specifically, Defendants QTT, L. Li, Wang, Jaing, Dong, Chen,\n\n Citigroup, and Deutsche Bank were involved in both the IPO\n\n and SPO Offerings. The question then is whether Plaintiff,\n\n having the necessary individual standing to bring a Section\n\n 11 claim as to the Defendants involved in the IPO, can bring\n\n\n                                        19\n\fCase 1:20-cv-06707-VM   Document 144     Filed 02/05/26   Page 20 of 51\n\n\n\n claims   on   behalf   of   the   unnamed    putative    class    members\n\n relating to the SPO against the Defendants involved in both\n\n Offerings.\n\n      The misstatements and omissions made in the IPO and SPO\n\n are sufficiently similar to plead class standing for the\n\n Section 11 claim as to the SPO for Defendants involved in\n\n both Offerings. While there are slight differences in wording\n\n between the alleged misstatements in the IPO and SPO Offering\n\n Documents, they raise the \u201csame set of concerns[.]\u201d NECA, 693\n\n F.3d at 162; see also Langan v. Johnson & Johnson Consumer\n\n Companies, Inc., 897 F.3d 88, 94 (2d Cir. 2018)(\u201c[N]on-\n\n identical injuries of the same general character can support\n\n standing.\u201d). Plaintiff would need to rely on substantially\n\n similar evidence to show that the misstatements and omissions\n\n contained in both the IPO and SPO relating to QTT\u2019s corporate\n\n strategy and business decisions, financial results, and its\n\n alleged failure to disclose related party transactions were\n\n materially    misleading.     Because     Plaintiff      has   plausibly\n\n alleged that he \u201c(1) personally has suffered some actual\n\n injury as a result of the putatively illegal conduct of the\n\n defendant,\u201d and (2) the conduct \u201cimplicates the same set of\n\n concerns as the conduct alleged to have caused injury to other\n\n members of the putative class by the same defendants,\u201d class\n\n standing as to the Section 11 SPO claims relating to the\n\n\n                                    20\n\fCase 1:20-cv-06707-VM     Document 144      Filed 02/05/26    Page 21 of 51\n\n\n\n Defendants involved both Offerings is proper. NECA, 693 F.3d\n\n at 162 (internal citations and ellipsis omitted).\n\n                   c. Statutory Standing\n\n       Distinct from \u201ctraditional\u201d Article III standing and the\n\n related \u201cclass standing\u201d inquiry is statutory standing, which\n\n asks whether the plaintiff\u2019s claims fall within the scope of\n\n a   statute.    See    Lexmark   Intern.,      Inc.   v.    Static    Control\n\n Components, Inc., 572 U.S. 118, 128 n.4 (2014). Statutory\n\n standing arguments are more \u201cabout the scope of the cause of\n\n action because they do not, as standing does, go to [the]\n\n Court\u2019s subject matter jurisdiction.\u201d Lozada, 710 F. Supp. 3d\n\n at 311 n.19.\n\n       Here, the Defendants challenge Plaintiff\u2019s statutory\n\n standing to bring certain claims under the Securities Act.\n\n Specifically,     the     Defendants         allege   that     because       the\n\n Plaintiff did not purchase shares from the SPO, his claims\n\n are not traceable to that offering as is required under\n\n Section   11.    \u201cTo    bring    a   claim    under   [Section]      11,     the\n\n securities held by the plaintiff must be traceable to the\n\n particular registration statement alleged to be false or\n\n misleading.\u201d Slack Techs., LLC v. Pirani, 598 U.S. 759, 768\n\n (2023). While Defendants\u2019 analysis is correct in the context\n\n of individual standing, the Plaintiff here has class standing\n\n as to certain Defendants.\n\n\n                                       21\n\fCase 1:20-cv-06707-VM   Document 144    Filed 02/05/26   Page 22 of 51\n\n\n\n      As discussed above, Plaintiff has class standing to\n\n bring a Section 11 claim as to the SPO on behalf of the\n\n unnamed putative class members against Defendants QTT, L. Li,\n\n Wang, Jaing, Dong, Chen, Citigroup, and Deutsche Bank, who\n\n were all involved in both the IPO and SPO offerings. While\n\n Plaintiff does not have individual statutory standing against\n\n these defendants to make a Section 11 claim as to the SPO,\n\n this circumstance does not constitute a material issue, as\n\n class standing allows him to pursue claims on behalf of the\n\n unnamed putative class members who can satisfy Section 11\n\n statutory   standing    by   tracing    their     securities     to     the\n\n statements in the SPO Offering Documents. Thus, the fact that\n\n Plaintiff does not individually have statutory standing for\n\n the SPO claim is remedied by class standing, which allows the\n\n Plaintiff to pursue the Section claim on behalf of unnamed\n\n putative class members as to the SPO. See NECA 693 F.3d at\n\n 158 (finding class standing applied even where plaintiff did\n\n not individually have statutory standing to pursue certain\n\n claims).\n\n             2.   Section 12(a)(2) Statutory Standing\n\n      Section 12(a)(2) of the Securities Act grants purchasers\n\n of securities an express cause of action against sellers who\n\n make material misstatements or omissions \u201cby means of a\n\n prospectus.\u201d 15 U.S.C. \u00a7 77l(a)(2). In the context of Section\n\n\n                                  22\n\fCase 1:20-cv-06707-VM     Document 144      Filed 02/05/26    Page 23 of 51\n\n\n\n 12(a)(2), the word \u201c\u2018prospectus\u2019 is a term of art referring\n\n to a document that describes a public offering of securities\n\n by an issuer or controlling shareholder.\u201d Gustafson v. Alloyd\n\n Co., 513 U.S. 561, 584 (1995). Thus, to have statutory\n\n standing    under    Section     12(a)(2),        \u201cplaintiffs     must       have\n\n purchased   securities        directly     from     the    defendants\u201d   in    a\n\n \u201cpublic offering[].\u201d Freidus v. Barclays Bank PLC, 734 F.3d\n\n 132, 141 (2d Cir. 2013); see In re Smart Techs. Inc. S\u2019holder\n\n Litig., 295 F.R.D. 50, 57 (S.D.N.Y. 2013) (\u201cIt is well-settled\n\n that a plaintiff may maintain a section 12(a)(2) claim only\n\n where the plaintiff purchased securities directly in the\n\n initial public offering.\u201d).\n\n        Moreover, courts in this Circuit routinely find that\n\n \u201c[p]laintiffs who purchased securities in a secondary market\n\n or aftermarket lack standing\u201d to bring a Section 12(a)(2)\n\n claim. Garnett v. RLX Tech. Inc., 632 F. Supp. 3d 574, 614\n\n (S.D.N.Y. 2022); see also In re Sterling Foster & Co., Inc.,\n\n Sec.   Litig.,     222   F.   Supp.   2d     216,    244    (E.D.N.Y.    2002)\n\n (collecting cases finding that \u201cpurchasers in private or\n\n secondary   market       offerings    are     precluded       from   bringing\n\n actions under Section 12(a)(2)\u201d). Here, Plaintiff concedes\n\n that he did not purchase QTT shares in the IPO or the SPO\n\n directly    from    Defendants.       (See    SAC     n.47.)    Accordingly,\n\n Plaintiff lacks statutory standing to bring a claim under\n\n\n                                       23\n\fCase 1:20-cv-06707-VM     Document 144         Filed 02/05/26   Page 24 of 51\n\n\n\n Section 12(a)(2). See In re HEXO Corp. Sec. Litig., 524 F.\n\n Supp.     3d    283,   305    (S.D.N.Y.       2021)       (dismissing     Section\n\n 12(a)(2)       claim   for    lack    of     standing      because    the   named\n\n plaintiffs did not purchase the company\u2019s shares during the\n\n IPO); In re Cosi, Inc. Sec. Litig., 379 F. Supp. 2d 580, 589\n\n (S.D.N.Y. 2005) (\u201c[B]ecause the plaintiffs have not alleged\n\n that they have purchased their shares in the IPO, they have\n\n failed to allege that they have standing to bring a claim\n\n under [Section] 12(a)(2).\u201d).\n\n         Plaintiff relies on Langan v. Johnson & Johnson Consumer\n\n Companies, Inc., 897 F.3d 88 (2d Cir. 2018), to establish he\n\n has class standing for his Section 12(a)(2) claims because he\n\n has   standing     for   his       Section     11    claims    as    to   certain\n\n defendants.       To   that    extent      his      reliance   on    Langan    is\n\n misplaced. In Langan, the Second Circuit discussed how NECA\n\n stood for the proposition that \u201cnon-identical injuries of the\n\n same general character can support standing.\u201d 897 F.3d at 94.\n\n It also reaffirmed, as NECA did, that \u201c\u2018with respect to each\n\n asserted claim\u2019 against each defendant, \u2018a plaintiff must\n\n always    have    suffered     a     distinct       and   palpable    injury   to\n\n herself.\u2019\u201d Id. at 92. Class standing, as described in Langan\n\n and NECA, \u201cdoes not stand for the sweeping proposition that\n\n an individual may represent absent class members with regard\n\n to claims as to which he or she has no individual standing[.]\u201d\n\n\n                                         24\n\fCase 1:20-cv-06707-VM    Document 144   Filed 02/05/26   Page 25 of 51\n\n\n\n Yi Xiang v. Inovalon Holdings, Inc., 327 F.R.D. 510, 520\n\n (S.D.N.Y. 2018) (quoting Stadnick v. Vivint Solar, Inc., No.\n\n 14-CV-9283, 2015 WL 8492757, at *17 (S.D.N.Y. Dec. 10, 2015),\n\n aff\u2019d, 861 F.3d 31 (2d Cir. 2017)).\n\n       \u201cIn NECA-IBEW Health & Welfare Fund, the Second Circuit\n\n allowed a plaintiff to bring claims on behalf of a class under\n\n the   same   statutes    regarding     different    prospectuses        and\n\n registration statements.\u201d Lozada, 710 F. Supp. 3d at 313.\n\n \u201c[I]t did not, however, allow the ability to bring class\n\n claims that stretch across different statutes.\u201d Id.; see also\n\n Stadnick, 2015 WL 8492757, at *18 (\u201c[P]laintiff here does not\n\n have statutory standing on his own right to pursue a claim\n\n under \u00a7 12(a)(2). Rather than expanding from his own statutory\n\n standing to represent a class of people with the same set of\n\n concerns,    plaintiff     instead     asserts     merely     that      the\n\n similarity between claims under \u00a7 11 and claims under \u00a7\n\n 12(a)(2) is enough. It is not, and plaintiff\u2019s lack of\n\n statutory standing for a \u00a7 12(a)(2) claim is dispositive.\u201d).\n\n       Here, Plaintiff \u201cdoes not have statutory standing in his\n\n own right to pursue a claim under Section 12(a)(2).\u201d Stadnick,\n\n 2015 WL 8492757, at *18. Though Plaintiff does have class\n\n standing to pursue his Section 11 claim as to the SPO against\n\n certain Defendants, this class standing does not \u201cstretch\n\n across different statutes\u201d to Plaintiff\u2019s Section 12(a)(2)\n\n\n                                   25\n\fCase 1:20-cv-06707-VM        Document 144         Filed 02/05/26        Page 26 of 51\n\n\n\n claims.      Lozada,       710   F.   Supp.           3d    at     313.       Therefore,\n\n \u201cplaintiff\u2019s lack of statutory standing for a \u00a7 12(a)(2) claim\n\n is dispositive.\u201d Stadnick, 2015 WL 8492757, at *18. Because\n\n there is not a named plaintiff who has statutory standing to\n\n bring    the    Section      12(a)(2)      claim,          this    action       must     be\n\n dismissed. Having addressed standing, the Court now turns to\n\n the Plaintiff\u2019s remaining claims, beginning with his Section\n\n 11 claim.\n\n         B.     SECTION 11\n\n         \u201cSection 11 establishes liability on the part of issuers\n\n of registration statements if \u2018any part of the registration\n\n statement, when such part became effective, contained an\n\n untrue statement of a material fact or omitted to state a\n\n material fact required to be stated therein or necessary to\n\n make the statements therein not misleading.\u2019\u201d City of Pontiac\n\n Policemen\u2019s & Firemen's Ret. Sys. v. UBS AG, 752 F.3d 173,\n\n 182   (2d      Cir.    2014)     (quoting        15    U.S.C.          \u00a7    77k(a)).     \u201cA\n\n misstatement          or   omission   is         material         if       \u2018there   is    a\n\n substantial       likelihood       that      a     reasonable              person   would\n\n consider the stated or omitted facts important in deciding\n\n whether to buy or sell shares of stock.\u2019\u201d In re Hut 8 Corp.\n\n Sec. Litig., No. 24-CV-904, 2025 WL 2636150, at *12 (S.D.N.Y.\n\n Sept. 12, 2025) (quoting Operating Local 649 Annuity Trust\n\n Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 92\u201393 (2d\n\n\n                                         26\n\fCase 1:20-cv-06707-VM    Document 144       Filed 02/05/26   Page 27 of 51\n\n\n\n Cir. 2010) (internal quotation marks omitted)). \u201cTo state a\n\n claim under Section 11, the plaintiff must allege that: (1)\n\n [they] purchased a registered security, either directly from\n\n the issuer or in the aftermarket following the offering; (2)\n\n the   defendant     participated      in   the   offering        in   a   manner\n\n sufficient to give rise to liability under section 11; and\n\n (3) the registration statement \u2018contained an untrue statement\n\n of a material fact or omitted to state a material fact\n\n required to be stated therein or necessary to make the\n\n statements therein not misleading.\u2019\u201d In re Morgan Stanley\n\n Info. Fund Sec. Litig., 592 F.3d 347, 358\u201359 (2d Cir. 2010)\n\n (quoting 15 U.S.C. \u00a7 77k(a)).              \u201cPlaintiffs need not allege\n\n scienter, reliance, or causation.\u201d City of Pontiac, 752 F.3d\n\n at 182.\n\n       Typically,      \u201cin     assessing     [Section]       11    claims,     we\n\n \u2018conduct    a    preliminary     inquiry     into   whether       plaintiffs\u2019\n\n allegations are premised on fraud,\u2019 or merely on negligence,\n\n to determine the appropriate pleading standard.\u201d Id. at 183\n\n (quoting In re Lehman Bros. Mortgage\u2013Backed Sec. Litig., 650\n\n F.3d 167, 174 (2d Cir. 2011)). Here, however, the Second\n\n Circuit has already determined that Plaintiff\u2019s allegations\n\n sound in negligence rather than fraud, making Rule 8 notice\n\n pleading the appropriate standard. (See Dkt. No. 113.) As\n\n discussed       previously,    Rule   8    requires    that      a    complaint\n\n\n                                       27\n\fCase 1:20-cv-06707-VM    Document 144      Filed 02/05/26   Page 28 of 51\n\n\n\n includes \u201cenough facts to state a claim for relief \u2018that is\n\n plausible on its face.\u2019\u201d Laguerre v. Related Mgmt. Co., No.\n\n 25-CV-5594, 2025 WL 2998053, at *1 (S.D.N.Y. Oct. 24, 2025)\n\n (quoting Twombly, 550 U.S. at 570). To prevail, plaintiff\n\n must have alleged \u201cfactual content that allows the court to\n\n draw the reasonable inference that the defendant is liable for\n\n the misconduct alleged.\u201d New Jersey Carpenters Health Fund v.\n\n Royal Bank of Scotland Grp., PLC, 709 F.3d 109, 120-21 (2d\n\n Cir. 2013) (quoting Iqbal, 556 U.S. at 678). \u201c[F]actual\n\n content     that   is   \u2018merely   consistent       with,\u2019     rather       than\n\n suggestive of, a finding of liability will not support a\n\n reasonable inference.\u201d Id. at 121 (quoting Twombly, 550 U.S.\n\n at 556). \u201cAlthough not subject to Rule 9(b)\u2019s heightened\n\n pleading standard, \u2018the complaint must still allege a false\n\n or misleading statement or omission in more than conclusory\n\n terms.\u2019\u201d In re Hut 8, No. 24-CV-904, 2025 WL 2636150, at *11\n\n (quoting Harris v. AmTrust Fin. Servs., Inc., 135 F. Supp. 3d\n\n 155, 170 (S.D.N.Y. 2015), aff\u2019d, 649 F. App\u2019x 7 (2d Cir.\n\n 2016)).\n\n      The SAC alleges multiple misstatements and omissions of\n\n material fact made in the Offering Documents. Specifically,\n\n the SAC alleges that (1) QTT misrepresented that it had an\n\n effective    screening    program    to    prevent     the   placement      of\n\n illegal advertisements on the QTT app, including the use of\n\n\n                                     28\n\fCase 1:20-cv-06707-VM         Document 144       Filed 02/05/26    Page 29 of 51\n\n\n\n artificial intelligence to screen advertisements (SAC \u00b6\u00b6 107-\n\n 08, 122); (2) QTT omitted from stating in the Offering\n\n Documents that it was actively placing a material amount of\n\n illegal advertisements on the QTT app at the time of the IPO\n\n and SPO (id. \u00b6\u00b6 109-11, 125-27); (3) a material amount of\n\n QTT\u2019s revenue growth came from placing illegal advertisements\n\n rather than from a strategy of targeting underserved users in\n\n lower tier cities (id. \u00b6\u00b6 8, 99-101, 116-17); and (4) QTT\n\n failed to disclose certain related party transactions (id. \u00b6\u00b6\n\n 48-66).      The     Court    will    address         each   of   these    alleged\n\n misstatements and omissions in turn.\n\n               1.   QTT\u2019s Statements Regarding the Screening of\n               Illegal Advertisements\n\n        The SAC alleges that QTT misled investors by stating in\n\n its    IPO    Offering        Documents        that    QTT    used    \u201cartificial\n\n intelligence\u201d and \u201cdeep learning methods\u201d to \u201cmonitor and\n\n identify objectionable visual content with a high degree of\n\n accuracy\u201d and flag \u201csuspicious content for manual review.\u201d\n\n (Id.   \u00b6     107).    According      to   Plaintiff,         these   claims       were\n\n misleading because they highlighted the effectiveness of\n\n QTT\u2019s content screening technology without disclosing that\n\n the Company placed ads declined by the screening technology\n\n on the QTT app after a second manual review by QTT employees.\n\n (See id. \u00b6\u00b6 73, 108).\n\n\n\n\n                                           29\n\fCase 1:20-cv-06707-VM      Document 144         Filed 02/05/26    Page 30 of 51\n\n\n\n         Defendants        argue     that        references           to     screening\n\n technology using \u201cartificial intelligence\u201d and \u201cdeep learning\n\n methods\u201d referred not to the screening of advertisements, but\n\n to the screening of user content on the QTT app. (Defs.\u2019 Mem.\n\n at 16-17.)\n\n        Here,   the     Court      agrees       with    Defendants           that     the\n\n references to \u201cartificial intelligence\u201d referred not to the\n\n screening of advertisements, but to the screening of QTT\u2019s\n\n core   content      for   consumers.          The   IPO   Offering          Documents\n\n contained      a      section     titled        \u201cAdvertising,\u201d              that     was\n\n immediately followed by a separate section titled \u201cContent\n\n Screening Technology.\u201d (SAC \u00b6 107.) The \u201cAdvertising\u201d section\n\n discussed QTT\u2019s use of technology to deliver targeted ads to\n\n users, making no mention of artificial intelligence and its\n\n implications for screening illegal ads. (Id.) In the very\n\n next section labeled \u201cContent Screening Technology,\u201d QTT\n\n described its use of \u201cartificial intelligence\u201d and \u201cdeep\n\n learning\u201d      to     decline      and     flag       certain        objectionable\n\n \u201ccontent.\u201d (Id.) This context indicates that the artificial\n\n intelligence        technology     was     being      used      to    screen       user\n\n content, like news articles, rather than advertisements.\n\n        While   Plaintiff        claims    that      QTT   itself          referred    to\n\n \u201cadvertising content\u201d in the Offering Documents, those same\n\n documents      also     referred     to       \u201ccontent       and      advertising\u201d\n\n\n                                          30\n\fCase 1:20-cv-06707-VM     Document 144       Filed 02/05/26     Page 31 of 51\n\n\n\n separately in other locations, indicating that QTT viewed\n\n content and advertising as distinct concepts. (Id.; Dkt. No.\n\n 124-12 at 16, 124-13 at 18.) Given that the statements\n\n regarding the use of artificial intelligence came in the\n\n \u201cContent    Screening     Technology\u201d        section,        rather   than     the\n\n immediately preceding \u201cAdvertising\u201d section, no reasonable\n\n investor     could     have     plausibly      interpreted         Defendant\u2019s\n\n statements to mean that QTT\u2019s screening technology was used\n\n to screen advertisements.\n\n             2.   QTT Did Not Disclose That It Was Placing\n             Illegal Advertisements On the QTT App\n\n       The   SAC   alleges       that   the     Offering       Documents        were\n\n materially false and misleading because they did not disclose\n\n to   investors    that    QTT    was    actively       violating       People\u2019s\n\n Republic of China (\u201cPRC\u201d) advertising laws and regulations at\n\n the time those documents became effective. (See SAC \u00b6\u00b6 101,\n\n 105, 109-11, 118, 121, 126-27.) To support that illegal ads\n\n were being placed on the platform at the time the Offering\n\n Documents became effective, Plaintiff points to confidential\n\n witness     allegations       regarding      the    placement         of   \u201cnon-\n\n conforming\u201d ads on the QTT App, public reporting of illegal\n\n ads, a lawsuit filed against QTT regarding gambling ads, and\n\n a talk between QTT and a Chinese regulator. (Id. \u00b6\u00b6 72-75,\n\n 88-95.) Plaintiff also argues that QTT\u2019s risk disclosures\n\n\n\n\n                                        31\n\fCase 1:20-cv-06707-VM    Document 144     Filed 02/05/26    Page 32 of 51\n\n\n\n regarding illegal advertisements on the QTT App do not protect\n\n Defendants    from     liability   because    at   the     time   the      risk\n\n disclosures     were      made     QTT   \u201cwas      actively       violating\n\n [advertising] regulations.\u201d (Pl.\u2019s Opp\u2019n at 11.) Defendants\n\n respond that QTT fully disclosed its illegal advertisement\n\n risks, including the risk that the Company could be currently\n\n violating PRC advertising laws and regulations at the time\n\n the disclosures were made. (Defs.\u2019 Mem. at 12-15.)\n\n      The Court finds that the SAC fails to allege that the\n\n Offering Documents contained materially false and misleading\n\n statements regarding the existence of illegal advertisements\n\n at the time the statements became effective because QTT fully\n\n disclosed the risk of illegal advertisements on the QTT App.\n\n      In its Offering Documents, QTT disclosed the risk that\n\n illegal advertisements could appear on its platform. In the\n\n Offering Documents QTT expressly warned investors that it\n\n \u201ccannot assure [investors] that all the advertisements shown\n\n on [its] mobile applications are true, accurate, appropriate\n\n and in full compliance with applicable laws and regulations.\u201d\n\n (SAC \u00b6 110.) This disclosure of risk is in the present tense.\n\n It tells investors that at the time the statements were made,\n\n QTT \u201ccannot assure\u201d that \u201call the advertisements\u201d on the\n\n platform fully complied with PRC laws and regulations. (Id.)\n\n Though   \u201ccautionary       words    about    future       risk\u201d   are       not\n\n\n                                     32\n\fCase 1:20-cv-06707-VM      Document 144     Filed 02/05/26    Page 33 of 51\n\n\n\n sufficient      to   protect   against      risks     that   have      occurred\n\n already and are likely to occur again, the words used by QTT\n\n indicate that at the time of the disclosures, QTT could have\n\n been    in     active    violation    of   PRC    advertising       laws     and\n\n regulations. Van v. Bright Health Grp., Inc., No. 24-3132-\n\n CV, 2025 WL 3171688, at *3 (2d Cir. Nov. 13, 2025) (quoting\n\n Set Cap. LLC v. Credit Suisse Grp. AG, 996 F.3d 64, 85 (2d\n\n Cir. 2021)).\n\n         Plaintiff states that the disclosures in this case are\n\n similar to the disclosures that the Second Circuit found\n\n inadequate in Meyer v. Jinkosolar Holdings Co., Ltd., 761\n\n F.3d 245, 250 (2d Cir. 2014). In that case, the Second Circuit\n\n found that the \u201cfailure to disclose then-ongoing and serious\n\n pollution violations\u201d was actionable despite investors being\n\n \u201cwarned of a financial risk to the company from environmental\n\n violations.\u201d Jinkosolar, 761 F.3d at 251. However, in that\n\n case,    the    defendant    had     submitted    a    report     to    Chinese\n\n Regulators       about    existing     problems       regarding     pollution\n\n violations. Id. The Court found that given the known existence\n\n of problems at the time the offering documents were published,\n\n the company\u2019s \u201cgeneric warning\u201d of a risk that that non-\n\n compliance with environmental regulations may be costly would\n\n \u201cnot suffice when undisclosed facts on the ground would\n\n substantially affect a reasonable investor\u2019s calculations of\n\n\n                                       33\n\fCase 1:20-cv-06707-VM     Document 144     Filed 02/05/26    Page 34 of 51\n\n\n\n probability.\u201d Id. Here, Plaintiff does not identify any such\n\n self-disclosure or knowledge of ongoing violations by QTT.\n\n         This case is more similar to Jiajia Luo v. Sogou, Inc.,\n\n 465 F. Supp. 3d 393, 409\u201310 (S.D.N.Y. 2020), where the court\n\n found     that    the    company\u2019s    disclosures          properly     warned\n\n investors that the company could not assure or guarantee that\n\n they were currently complying with the law. In Sogou, the\n\n offering documents included a statement that \u201c[a]lthough we\n\n are committed to complying with . . . PRC laws and regulations\n\n applicable to Internet-related service . . . activities, we\n\n cannot guarantee that we are now or will in the future be in\n\n full compliance with any such laws and regulations that apply\n\n to our services and activities.\u201d           465 F. Supp. 3d at 410. The\n\n court in that case found that because of the company\u2019s risk\n\n disclosure, \u201cno reasonable investor could infer that [the\n\n company\u2019s] compliance efforts were particularly effective.\u201d\n\n Id. Here, QTT similarly acknowledged the current and ongoing\n\n risk    that     it   \u201ccannot   assure    [investors]        that     all   the\n\n advertisements shown on [QTT\u2019s] mobile applications are true,\n\n accurate, appropriate and in full compliance with applicable\n\n laws and regulations.\u201d (SAC \u00b6 110.) Based on QTT\u2019s risk\n\n disclosures, no reasonable investor could infer that QTT\u2019s\n\n compliance efforts were currently effective.\n\n\n\n\n                                      34\n\fCase 1:20-cv-06707-VM   Document 144     Filed 02/05/26   Page 35 of 51\n\n\n\n        Additionally, Plaintiff fails to allege any omission by\n\n Defendants    of   a   violation   of    PRC     advertising    laws     and\n\n regulations at the time of the IPO and SPO that would render\n\n QTT\u2019s risk disclosure ineffective or misleading. Plaintiff\n\n attempts to support his argument that QTT knew it was placing\n\n illegal ads on its platform at the time the Offering Documents\n\n became effective in several ways. First, Plaintiff argues\n\n that    allegations     by   confidential        witnesses     support     a\n\n plausible    inference   that   QTT     placed    illegal    ads   on    the\n\n platform at the time of the Offerings. (See SAC \u00b6\u00b6 72-75.)\n\n Second, Plaintiff points to public reporting indicating that\n\n QTT had illegal advertisements on its platform. (See id. \u00b6\u00b6\n\n 88-89.) Third, Plaintiff claims there was a lawsuit filed\n\n against QTT\u2019s Chinese entity Jifen in January 2019 regarding\n\n illegal gambling advertisements on the QTT app. (See id. \u00b6\n\n 90.) Fourth, Plaintiff asserts that QTT was summoned for a\n\n talk regarding illegal advertisements on June 18, 2019, with\n\n the Shanghai Municipal Market Supervision Bureau, a Chinese\n\n regulator. (See id. \u00b6 91.) The Court will address each of\n\n these allegations in turn.\n\n        Plaintiff alleges that confidential witnesses support a\n\n plausible inference that QTT placed illegal advertisements on\n\n the QTT App at the time of the Offerings. Plaintiff identifies\n\n two confidential witnesses. The first is a channel manager at\n\n\n                                    35\n\fCase 1:20-cv-06707-VM    Document 144        Filed 02/05/26   Page 36 of 51\n\n\n\n Dianguan from June 2019 to September 2020 (\u201cFormer Channel\n\n Manager\u201d). (See id. \u00b6\u00b6 72-73.) The Former Channel Manager\n\n claimed     that   while      QTT    used         technology     to    screen\n\n advertisements, if an advertisement that \u201ctoed the line\u201d was\n\n screened out, the ads could be subject to a second manual\n\n review that would allow those \u201cnon-conforming\u201d ads to be put\n\n on the platform. (Id. \u00b6\u00b6 71, 73.) The second confidential\n\n witness was a former sales director (\u201cFormer Sales Director\u201d)\n\n of Dianguan from March 2019 to May 2020 who explained that\n\n the second manual review was conducted by two teams, one team\n\n that dealt with well-known and qualified advertisers and a\n\n second team that dealt with riskier, unqualified advertisers.\n\n (Id. \u00b6\u00b6 72, 74-75.) The Former Sales Director alleged that\n\n the second team dealing with the unqualified advertisers\n\n outsourced due diligence to outside contractors who often\n\n opened accounts for any advertiser without conducting the\n\n proper due diligence. (Id. \u00b6 74.)\n\n        \u201c[T]he Court may properly take account of the alleged\n\n testimony of [a confidential witness] even though some of\n\n [their]     testimony    is    based        on     hearsay     and    indirect\n\n knowledge.\u201d City of Warren Police & Fire Ret. Sys. v. World\n\n Wrestling Ent. Inc., 477 F. Supp. 3d 123, 132 (S.D.N.Y. 2020).\n\n \u201cFor    a   complaint   to    rely     on        information    provided     by\n\n confidential sources\u201d, the source must be described in the\n\n\n                                      36\n\fCase 1:20-cv-06707-VM   Document 144   Filed 02/05/26   Page 37 of 51\n\n\n\n complaint with sufficient detail to \u201csupport the probability\n\n that a person in the position occupied by the source would\n\n possess   the   information   alleged.\u201d    Id.   (quoting     Novak    v.\n\n Kasaks, 216 F.3d 300, 314 (2d Cir. 2000)). The question here\n\n is whether it is probable that the two confidential witnesses\n\n were in a position to possess information regarding the\n\n screening and placement of illegal advertisements by QTT at\n\n the time of the Offerings.\n\n      The Court finds that the confidential witnesses are not\n\n described in the SAC in a manner sufficient to support the\n\n probability that they were in a position to possess the\n\n information alleged. First, the Former Channel Manager was\n\n hired after the April 2019 SPO and is not alleged to have\n\n worked on advertising at QTT. (SAC \u00b6 72.) Given that the\n\n Former Channel Manager was not working at QTT at the time of\n\n either offering and did not work in advertising at QTT, they\n\n are not someone who \u201cwould possess the information alleged.\u201d\n\n City of Warren, 477 F. Supp. 3d at 132. For the Former Sales\n\n Director, the SAC itself acknowledges that they \u201cdid not deal\n\n with unqualified advertisers,\u201d and only learned \u201cabout how\n\n the Company dealt with those advertisers from co-workers.\u201d\n\n (Id. \u00b6 74.) These confidential witnesses\u2019 allegations are\n\n based not on direct observations, but instead on \u201csecond-hand\n\n information, obtained only through intermediaries.\u201d Janbay v.\n\n\n                                  37\n\fCase 1:20-cv-06707-VM      Document 144      Filed 02/05/26     Page 38 of 51\n\n\n\n Canadian Solar, Inc., 2013 WL 1287326, at *8 (S.D.N.Y. Mar.\n\n 28,   2013).    Such     second-hand      information        undermines        \u201cthe\n\n likelihood     that      [the   confidential      witness]       had   personal\n\n knowledge of the allegations.\u201d Id. Given these issues, the\n\n SAC does not \u201csupport the probability that a person in the\n\n position[s] occupied by the [confidential witnesses] would\n\n possess the information alleged.\u201d City of Warren, 477 F. Supp.\n\n 3d at 132.\n\n       Even if the SAC properly described the confidential\n\n witnesses     as   occupying     positions      that     would    possess       the\n\n information alleged, the witnesses would still not allege\n\n that illegal advertisements were placed on the QTT App. The\n\n confidential witnesses speak of \u201crisky,\u201d advertisements that\n\n \u201ctoed the line.\u201d (SAC \u00b6\u00b6 72-75.) However, nowhere does the\n\n SAC explicitly state that the confidential witnesses alleged\n\n that illegal advertisements were being placed on the QTT App.\n\n Given the fact that neither confidential witness explicitly\n\n stated that illegal ads were being placed on the QTT App at\n\n the   time    of   the    Offerings,      neither      witness     supports       a\n\n plausible inference that QTT placed illegal ads during the\n\n IPO and SPO.\n\n       Next,    Plaintiff\u2019s       allegations      that       public    reporting\n\n revealed that QTT was placing illegal advertisements on the\n\n QTT   App     represent     claims     of    \u201cuncharged,         unadjudicated\n\n\n                                      38\n\fCase 1:20-cv-06707-VM    Document 144      Filed 02/05/26   Page 39 of 51\n\n\n\n wrongdoing    or    mismanagement\u201d        that   Defendants       were     not\n\n obligated to disclose in the Offerings. Ciresi v. Citicorp,\n\n 782 F. Supp. 819, 823 (S.D.N.Y. 1991), aff\u2019d, 956 F.2d 1161\n\n (2d Cir. 1992). Further, any such reporting regarding illegal\n\n advertisements on the QTT app would be entirely consistent\n\n with QTT\u2019s risk disclosure that it could not assure investors\n\n that all advertisements on the platform complied with PRC\n\n laws and regulations.\n\n      Addressing Plaintiff\u2019s allegations that a January 2019\n\n lawsuit against QTT\u2019s Chinese entity Jifen showed that QTT\n\n placed gambling ads on the QTT app, the Chinese court in that\n\n matter   dismissed     the    case   without      making    any    findings\n\n regarding ads. (See SAC \u00b6 90.) Accordingly, there was no\n\n finding regarding a violation of PRC advertising laws or\n\n regulations for QTT to disclose in the Offering Documents.\n\n      Lastly, Plaintiff alleges that on June 18, 2019, QTT was\n\n summoned for a talk and sternly warned by the Shanghai\n\n Municipal Market Supervision Bureau, a Shanghai regulator,\n\n regarding QTT\u2019s illegal advertising practices. (See id. \u00b6\n\n 91.) First, this discussion took place two months after the\n\n April 2019 SPO. As Defendants point out, this discussion with\n\n a   regulator      cannot    \u201cretroactively      render     the    offering\n\n documents materially false or misleading.\u201d (Defs.\u2019 Mem. at\n\n 14); see Sogou, 465 F. Supp. 3d at 406 (\u201cIt is not sufficient\n\n\n                                      39\n\fCase 1:20-cv-06707-VM     Document 144        Filed 02/05/26    Page 40 of 51\n\n\n\n that, at some point after the registration statement became\n\n effective,      some     subsequent         event    made      it    no   longer\n\n accurate.\u201d); see also In re Hut 8, 2025 WL 2636150, at *12\n\n (\u201c[A]n actionable misstatement is one that \u2018was false at the\n\n time it was made.\u2019\u201d (quoting In re Lululemon Sec. Litig., 14\n\n F.Supp.3d 553, 571 (S.D.N.Y. 2014))).\n\n         Given QTT\u2019s risk disclosures and the fact that the SAC\n\n fails    to   properly    plead      any    undisclosed       advertising      law\n\n violations by QTT, the Court does not find there to be any\n\n actionable     misrepresentations           or   omissions      by   Defendants\n\n regarding the placement of illegal advertisements on the QTT\n\n App at the time of the IPO and SPO.\n\n               3.   QTT\u2019s Failure to Disclose Knowledge of\n               Illicit Advertising as a Key Driver of Revenue\n               Growth\n\n         It is well established that \u201ccompanies do not have a\n\n duty to disclose uncharged, unadjudicated wrongdoing.\u201d City\n\n of   Pontiac,    752     F.3d   at    184    (internal        quotation   marks\n\n omitted). However, \u201cthe duty to disclose uncharged wrongdoing\n\n may arise in three scenarios: (1) \u2018when a corporation puts\n\n the reasons for its success at issue, but fails to disclose\n\n that a material source of its success is the use of improper\n\n or illegal business practices\u2019; (2) \u2018when a defendant makes\n\n a statement that can be understood, by a reasonable investor,\n\n to deny that the illegal conduct is occurring\u2019; or (3) \u2018when\n\n\n                                        40\n\fCase 1:20-cv-06707-VM       Document 144       Filed 02/05/26    Page 41 of 51\n\n\n\n a   defendant     states     an    opinion      that,    absent      disclosure,\n\n misleads    investors       about       material    facts      underlying       that\n\n belief.\u2019\u201d In re Teva Sec. Litig., 671 F. Supp. 3d 147, 211\u2013\n\n 12 (D. Conn. 2023) (quoting Menaldi v. Och-Ziff Capital Mgmt.\n\n Grp. LLC, 164 F. Supp. 3d 568, 581 (S.D.N.Y. 2016)). \u201cWhen a\n\n securities fraud action rests on the failure to disclose\n\n uncharged       illegal    conduct,       the    complaint      must    state      a\n\n plausible       claim   that      the    underlying      conduct     occurred.\u201d\n\n Menaldi, 164 F. Supp. 3d at 578. Because Plaintiff alleges\n\n that Defendants provided reasons for the Company\u2019s growth in\n\n revenue but \u201cfail[ed] to disclose that a material source of\n\n its success\u201d was the placement of illegal advertisements on\n\n the QTT App, they must state a \u201cplausible claim that the\n\n underlying conduct occurred.\u201d Id.\n\n         Plaintiff alleges that investors were misled about what\n\n drove QTT\u2019s revenue growth because Defendants \u201cfailed to\n\n disclose that illicit advertising was also a key driver.\u201d\n\n (Pl.\u2019s Opp\u2019n at 16.) Specifically, the SAC alleges that\n\n statements      in   the    Offering      Documents      that     increases      in\n\n revenue were caused by QTT\u2019s strategy of targeting users in\n\n lower    tier    cities     were    materially       false     and     misleading\n\n because they did not \u201cdisclose that a substantial portion of\n\n QTT\u2019s \u2018rapidly\u2019 increasing revenue was derived from illegal\n\n ads.\u201d (Id.) Plaintiff also alleges that QTT\u2019s statements\n\n\n                                          41\n\fCase 1:20-cv-06707-VM     Document 144       Filed 02/05/26   Page 42 of 51\n\n\n\n regarding revenue growth were misleading in that they omitted\n\n that \u201creduc[ing] [QTT\u2019s] reliance\u201d on Baidu in favor of a new\n\n \u201cadvertising agent\u201d Dianguan \u201cincreased the likelihood of\n\n illegal ads\u201d being placed on the QTT platform. (Id. at 16-\n\n 17.) Plaintiff argues that under Rule 8 they have \u201cadequately\n\n pled that illegal ads materially contributed to QTT\u2019s revenue\n\n growth, as evidenced by its first ever year-over-year revenue\n\n decrease after enacting remedial measures to halt illegal\n\n ads[.]\u201d (Id. at 18.) Plaintiff further alleges that the\n\n omission was material to investors \u201cas evidenced by QTT\u2019s\n\n ADSs\u2019    falling    24     [percent]      after    investors    learned      the\n\n truth.\u201d (Id.)\n\n         Defendants argue that Plaintiff does not support his\n\n claim regarding illegal advertisements being a key driver of\n\n revenue    for     QTT   with   \u201cwell-plead        factual     allegations.\u201d\n\n (Defs.\u2019 Reply at 1.) Specifically, Defendants argue that the\n\n \u201cSAC includes no allegation regarding the volume of allegedly\n\n illegal     advertisements\u201d         and     that     the     \u201ccircumstantial\n\n allegations on which Plaintiff relies . . . are either\n\n unreliable, speculative, or conclusory.\u201d (Id.)\n\n         Plaintiff    has     not    adequately       pled      that   illegal\n\n advertisements       materially      contributed       to    QTT\u2019s    revenue\n\n growth.    As    evidence    that   illegal       advertisements      were    so\n\n \u201csubstantial\u201d that they constituted a material contribution\n\n\n                                        42\n\fCase 1:20-cv-06707-VM    Document 144   Filed 02/05/26   Page 43 of 51\n\n\n\n to QTT\u2019s revenue growth, Plaintiff points to QTT\u2019s first ever\n\n year-over-year revenue decrease after QTT enacted remedial\n\n measures to prevent illegal ads. (Pl.\u2019s Opp\u2019n at 18.)\n\n      The   Court   is    not   persuaded   that    this    evidence     is\n\n sufficient to support a plausible inference that QTT failed\n\n to disclose that a material number of illegal advertisements\n\n existed on the QTT App at the time of the Offerings. First,\n\n the drop in revenue took place in 2020, after both the\n\n September 2018 IPO and the April 2019 SPO were filed. This\n\n does not demonstrate that prior to 2020, QTT knew that a\n\n substantial portion of advertisements were illegal. Plaintiff\n\n must demonstrate that Defendants knew the statements were\n\n misleading at the time of the registration statements became\n\n effective, rather than later in time. See In re Tufin Software\n\n Techs. Ltd. Sec. Litig., No. 20-CV-5646, 2022 WL 596861, at\n\n *5 (S.D.N.Y. Feb. 25, 2022) (\u201cThe veracity of a registration\n\n statement which may give rise to liability under [Section 11]\n\n is determined by assessing the facts as they existed when the\n\n statement became effective.\u201d) (quoting Ladmen Partners, Inc.\n\n v. Globalstar, Inc., No. 07-CV-0976, 2008 WL 4449280, at *10\n\n (S.D.N.Y. Sept. 30, 2008)); Scott v. Gen. Motors Co., 46 F.\n\n Supp. 3d 387, 394 (S.D.N.Y. 2014), aff\u2019d, 605 F. App\u2019x 52 (2d\n\n Cir. 2015) (\u201cPlaintiffs must, \u2018at a minimum, plead facts to\n\n demonstrate that allegedly omitted facts both existed, and\n\n\n                                   43\n\fCase 1:20-cv-06707-VM    Document 144     Filed 02/05/26   Page 44 of 51\n\n\n\n were known or knowable, at the time of the offering.\u2019\u201d)\n\n (quoting Lin v. Interactive Brokers Grp., Inc., 574 F. Supp.\n\n 2d 408, 421 (S.D.N.Y. 2008)); In re Coty Inc. Sec. Litig.,\n\n No. 14-CV-919, 2016 WL 1271065, at *6 (S.D.N.Y. Mar. 29, 2016)\n\n (decline in operating income after IPO \u201coffer little guidance\n\n as to the information that was available at the time of the\n\n IPO\u201d). Plaintiff therefore fails to allege that QTT knew that\n\n there were a substantial number of illegal advertisements on\n\n its platform at the time the Offerings.\n\n         Additionally, a certain drop in QTT\u2019s revenue does not\n\n equate to the equivalent drop in the number of illegal\n\n advertisements on the QTT App. While a substantial number of\n\n advertisements being illegal is a possible explanation for\n\n why   revenue   decreased    in   2020     after    QTT   took    remedial\n\n measures, without more this explanation is not brought into\n\n the realm of plausible, as there are a myriad of reasons why\n\n revenue can decrease from year-to-year. Plaintiff cannot\n\n allege any evidence regarding the high prevalence of illegal\n\n advertisements at the time the Offering Documents were filed,\n\n let alone that QTT knew that there was a substantial number\n\n of illegal advertisements on the QTT App at that time.\n\n         Regarding Plaintiff\u2019s allegation that Defendants misled\n\n investors by omitting that the acquisition of Dianguan as\n\n QTT\u2019s    \u201cadvertising    agent\u201d   \u201cincreased        the   likelihood      of\n\n\n                                   44\n\fCase 1:20-cv-06707-VM    Document 144     Filed 02/05/26    Page 45 of 51\n\n\n\n illegal ads,\u201d Plaintiff has not pled non-conclusory facts\n\n that taken as true would support such a claim. (Pl.\u2019s Opp\u2019n\n\n at 16.) Plaintiff provides no support for any such allegation,\n\n which runs counter to QTT\u2019s statements in Offering Documents\n\n that they acquired Dianguan as their advertising agent to\n\n \u201cenhance [its] platform\u2019s monetization capabilities.\u201d (SAC \u00b6\u00b6\n\n 101, 112, 118, 124.) While Plaintiff alleges that Dianguan\u2019s\n\n founder   lacked       experience   in     digital        marketing,       that\n\n circumstance has little bearing on whether the acquisition\n\n would increase the likelihood of illegal ads being placed on\n\n the QTT App compared to the previous advertising agent Baidu.\n\n            4.   QTT Failed to Disclose Related Party\n            Transactions\n\n      Plaintiff alleges that Defendants failed to disclose\n\n related   party    transactions     as    required        under   Generally\n\n Accepted Accounting Principles (\u201cGAAP\u201d), SEC Regulation S-X\n\n (SAC \u00b6\u00b6 52-53), and Financial Accounting Standards Board\n\n (\u201cFASB\u201d) Accounting Standards Codification (\u201cACS\u201d) 850 (SAC\n\n \u00b6 54). Related parties under FASB ASC 850 include: (1)\n\n \u201cAffiliates of the entity\u201d (ASC 850-10-20); (2) \u201cPrincipal\n\n owners of the entity and members of their immediate families\u201d\n\n (id.); (3) \u201c[m]anagement of the entity and members of their\n\n immediate families\u201d (id.); (4) \u201c[o]ther parties with which\n\n the entity may deal if one party controls or can significantly\n\n\n\n                                     45\n\fCase 1:20-cv-06707-VM        Document 144      Filed 02/05/26     Page 46 of 51\n\n\n\n influence the management or operating policies of the other\n\n to an extent that one of the transacting parties might be\n\n prevented from fully pursuing its own separate interests\u201d\n\n (id.);    and    (5)       \u201c[o]ther   parties      that    can    significantly\n\n influence       the    management      or     operating    policies        of    the\n\n transacting parties or that have an ownership interest in one\n\n of the transacting parties and can significantly influence\n\n the other to an extent that one or more of the transacting\n\n parties    might      be    prevented       from   fully   pursuing        its   own\n\n separate interests\u201d (id.).\n\n        Plaintiff alleges that QTT omitted material facts in the\n\n Offering Documents by not disclosing certain related party\n\n transactions. (See SAC \u00b6\u00b6 48-66.) First, Plaintiff alleges\n\n that QTT\u2019s acquisition of Dianguan should have been disclosed\n\n as a related party transaction, because QTT\u2019s co-founder and\n\n CEO Tan had a \u201cclose business relationship\u201d with Dianguan\u2019s\n\n founder,    Xiang      \u201cSean\u201d       Liang    (\u201cLiang\u201d).        (Id.   \u00b6\u00b6   57-61.)\n\n Second, Plaintiff alleges that QTT also failed to disclose\n\n that   transactions          with   advertisers      Mengtui,         Fangce,    and\n\n Shihui Miao were related party transactions because these\n\n entities were related parties benefitting Tan. (See id. \u00b6\u00b6\n\n 62-66.)\n\n\n\n\n                                         46\n\fCase 1:20-cv-06707-VM      Document 144    Filed 02/05/26    Page 47 of 51\n\n\n\n         The analysis below first considers Plaintiff\u2019s claim\n\n regarding Dianguan, and then turns to the claims regarding\n\n Mengtui, Fangce, and Shihui Miao.\n\n                     a. Dianguan\n\n         According to the SAC, Liang founded Dianguan four months\n\n prior to its acquisition by QTT in February 2018. (Id. \u00b6 57-\n\n 58.) Liang was Dianguan\u2019s director and legal representative\n\n at the time of the acquisition. (Id. \u00b6 58.) The SAC argues\n\n that     \u201cLiang     and   Tan\u2019s     business     relationship       was     so\n\n intertwined that Dianguan would have been prevented from\n\n fully    pursing    its    own    separate    interest[.]\u201d      (Id.    \u00b6   61\n\n (internal quotations omitted).)\n\n         The SAC provides two factual assertions to support its\n\n contention that Liang had a special relationship with Tan at\n\n the    time   QTT   acquired      Dianguan.    First,      before   founding\n\n Dianguan, Liang was an investment director of a company called\n\n Shanghai      Taiyun   Investment     Management     Co.     Ltd.   (\u201cTaiyun\n\n Capital\u201d), in which Tan had 99 percent ownership. (Id. \u00b6 58.)\n\n Second, Plaintiff alleges that \u201cwithin weeks of the Dianguan\n\n Acquisition, [] Tan invested in a company [called Nantong\n\n WooFoo Jinxin Equity Investment Fund Partnership (\u201cWoofoo\n\n Equity\u201d)] which was the executive partner of another company\n\n at which Liang was the director of domestic investment.\u201d (Id.\n\n \u00b6 60.) Plaintiff alleges that, because of these connections,\n\n\n                                      47\n\fCase 1:20-cv-06707-VM     Document 144        Filed 02/05/26   Page 48 of 51\n\n\n\n \u201cLiang and Tan\u2019s business relationship was so intertwined\n\n that Dianguan would have been prevented from fully pursing\n\n its own separate interest.\u201d (Id. \u00b6 61 (internal quotation\n\n marks omitted).)\n\n       While Plaintiff describes a close business relationship\n\n between Liang and Tan, he fails to adequately plead that this\n\n relationship was so intertwined that Dianguan might have been\n\n prevented    from     fully   pursuing       its    own   interests.    First,\n\n because Tan\u2019s involvement with Woofoo Equity came after QTT\u2019s\n\n acquisition of Dianguan, it has no bearing on whether Liang\n\n and Tan were related parties at the time of the transaction\n\n between QTT and Dianguan, which is the \u201cpertinent point.\u201d In\n\n re Hebron Tech. Co., Ltd. Sec. Litig., No. 20-CV-4420, 2021\n\n WL 4341500, at *13 (S.D.N.Y. Sept. 22, 2021) (rejecting\n\n plaintiff\u2019s claim that defendant failed to disclose a related\n\n party transaction where the SAC did not allege a relationship\n\n at the time of the relevant transactions). That Liang served\n\n as an investment director at Taiyun Capital, a company 99\n\n percent owned by Tan, also does not sufficiently allege that\n\n Tan   had   control    over   Liang     so     as   to    make   the   Dianguan\n\n acquisition a related party transaction. The existence of\n\n business relationship between Tang and Liang did not trigger\n\n a duty to disclose. \u201c[T]he fact of a separate association\n\n between [] two men\u201d does not mean that one individual had\n\n\n                                       48\n\fCase 1:20-cv-06707-VM      Document 144        Filed 02/05/26      Page 49 of 51\n\n\n\n control over another so as to make the transaction a \u201crelated\n\n party transaction.\u201d In re Hebron, 2021 WL 4341500, at *15.\n\n Here, Liang\u2019s role at a third company primarily owned by Tan,\n\n Taiyun Capital, does not meet the related party standard\n\n because    Plaintiff      does   not   plausibly          allege     how    Liang\u2019s\n\n business relationship with Tan would have \u201cprevented [Liang]\n\n from fully pursuing [his] own separate interest.\u201d Id. at *11.\n\n                     b. Mengtui, Fangce, and Shihui Mioa\n\n         Plaintiff also fails to allege any undisclosed related\n\n party     transactions     at    the   time        of     the   Offerings         with\n\n advertisers    Mengtui,      Fangce,        and    Shihui       Mioa.   Plaintiff\n\n alleges that QTT\u2019s transactions with its advertisers Mengtui,\n\n Fangce, and Shihui Miao should have been disclosed in the\n\n Offering Documents as related party transactions. (SAC \u00b6\u00b6 62-\n\n 65.) While the Defendants\u2019 do not dispute that these are\n\n related     party      transactions,           they       state      that     these\n\n transactions were properly disclosed in QTT\u2019s 2019 annual\n\n report. (Defs.\u2019 Mem. at 24-25.) Defendants argue that the\n\n \u201cSAC     persists    in    pleading      no       facts    regarding        [QTT\u2019s]\n\n transactions with these entities at the time of the September\n\n 2018 IPO or April 2019 SPO, defeating this claim.\u201d (Id. at\n\n 25.) Because the SAC does not allege that the transactions\n\n began before the IPO and SPO and because they were disclosed\n\n as part of QTT\u2019s annual review, the SAC fails to adequately\n\n\n                                        49\n\fCase 1:20-cv-06707-VM   Document 144   Filed 02/05/26   Page 50 of 51\n\n\n\n plead that QTT did not disclose related party transactions at\n\n the appropriate time. See Sogou, 465 F. Supp. 3d at 406 (\u201cIt\n\n is not sufficient that, at some point after the registration\n\n statement became effective, some subsequent event made it no\n\n longer accurate.\u201d)\n\n      C.    SECTION 15\n\n      Section 15 of the Securities Act creates liability for\n\n individuals or entities that \u201ccontrol[ ] any person liable\u201d\n\n under Sections 11 or 12. 15 U.S.C. \u00a7 77o(a). To state a claim\n\n for control person liability under Section 15, \u201ca plaintiff\n\n must allege \u2018a primary violation by a controlled person, and\n\n control by the defendant of the primary violator\u2019\u201d Ohio Pub.\n\n Emps. Ret. Sys. v. Discovery, Inc., 715 F. Supp. 3d 483, 505\n\n (S.D.N.Y. 2024), aff\u2019d, No. 24-646-CV, 2024 WL 4647131 (2d\n\n Cir. Nov. 1, 2024) (quoting In re Global Crossing, Ltd. Secs.\n\n Litig., 322 F. Supp. 2d 319, 349 (S.D.N.Y. 2004)) (cleaned\n\n up). \u201cIf the plaintiff has not adequately alleged a primary\n\n violation \u2013 i.e. a viable claim under another provision of\n\n the Securities Act \u2013 the Section 15 claim must be dismissed.\u201d\n\n In re Hut 8, No. 24-CV-904, 2025 WL 2636150, at *6. Here, the\n\n Court has found that there are no viable claims under Section\n\n 11 or Section 12. Therefore, Plaintiff does not have a viable\n\n Section 15 claim.\n\n\n\n\n                                  50\n\fCase 1:20-cv-06707-VM   Document 144     Filed 02/05/26   Page 51 of 51\n\n\n\n                              IV.    ORDER\n\n      For the preceding reasons, it is hereby\n\n      ORDERED that the motion (the \u201cMotion\u201d) (Dkt. No. 122) of\n\n Defendants Oliver Yucheng Chen, China Merchants Securities\n\n (HK) Co., Ltd., Citigroup Global Markets Inc., Yongbo Dai,\n\n Deutsche Bank Securities Inc., Jianfei Dong, Jefferies Group\n\n LLC, Shaoqing Jiang, KeyBanc Capital Markets Inc., Feng Li,\n\n Lei Li, James Jun Peng, Qutoutiao Inc., Eric Siliang Tan, UBS\n\n Securities LLC, Jingbo Wang, and Xiaolu Zhu to dismiss the\n\n Second Amended Consolidated Class Action Complaint (Dkt. No.\n\n 118) is GRANTED.\n\n      The Clerk of Court is respectfully directed to close\n\n Dkt. No. 118.\n\n\n\n SO ORDERED.\n\n Dated:     5 February 2026\n            New York, New York\n\n\n\n\n                                    51\n\f","ocr_status":2,"date_upload":"2026-06-17T04:16:31.223905-07:00","document_number":"28","attachment_number":null,"pacer_doc_id":"127039019909","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":"2026-02-05T13:11:57.127559-08:00","date_modified":"2026-02-05T13:11:57.135568-08:00","date_filed":"2026-02-05","time_filed":"15:48:34","entry_number":28,"recap_sequence_number":"2026-02-05.001","pacer_sequence_number":111,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/360627885/","id":360627885,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/367242628/","id":367242628,"tags":[],"absolute_url":"/docket/18453599/26/brown-v-qutoutiao-inc/","date_created":"2023-08-03T16:59:54.018419-07:00","date_modified":"2023-08-08T02:41:29.922071-07:00","sha1":"6ea0e263047f38175dec97fa40c21a339a71a94b","page_count":19,"file_size":1055046,"filepath_local":"recap/gov.uscourts.nysd.544615/gov.uscourts.nysd.544615.26.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.544615/gov.uscourts.nysd.544615.26.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"              Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 1 of 19\n\n\n\nUNITED STATES DISTRICT COURT\nSOUTHERN DISTRICT OF NEW YORK\n\n\n     In re QUTOUTIAO, INC. SECURITIES                                                         20-cv-6707 (SHS)\n  LITIGATION\n                                                                                           OPINION & ORDER\n\nSIDNEY H. STEIN, U.S. District Judge.\nI.     Background ......................................................................................................................................... 2\n       A. QTT .................................................................................................................................................. 2\n       B. Parties .............................................................................................................................................. 2\n       C. Claims ............................................................................................................................................. 3\nII.    Discussion ........................................................................................................................................... 4\n       A.1934 Exchange Act Claims ........................................................................................................... 4\n          1. Motion to Dismiss ..................................................................................................................... 4\n          2. Standard of Review ................................................................................................................... 5\n              a. Count I: Section lO(b) Claims Under the 1934 Exchange Act .................................... 5\n                 i. Misstatements or Omissions of Material Fact.. ......................................................... 5\n                     a) QTT' s Strategy of Rapidly Growing Revenues Through Intentional\n               Placement of Illegal Advertisements .................................................................................. 6\n                     b) QTT's Failure to Disclose Knowledge of Illicit Advertising as a Key Driver\n               of Revenue Growth ............................................................................................................... 8\n                     c) QTT' s Statements Regarding Screening of Illegal Advertisements ............... 9\n                     d) QTT's Failure to Disclose Related-Party Transactions ................................... 11\n                               1)     Dianguan ........................................................................................................... 12\n                               2)     Mengtui, Fangce, and Shihui Miao ................................................................ 13\n                          e)        QTT' s Inflation of Revenue for U.S. Filings..................................................... 13\n                          f)        QTT' s Failure to Disclose Contingent Liabilities ............................................ 14\n            b. Count II: Section 20(a) Claims Under the 1934 Exchange Act ................................. 15\n     B. 1933 Securities Act Claims .......................................................................................................... 15\n        1. Standard of Review ................................................................................................................. 16\n            a. Count Ill: Section 11 Claims .......................................................................................... 17\n              i. Standing ........................................................................................................................ 17\n              ii. Analysis ..................................................................................... :\u00b7\u00b7\u00b7\u00b7\u00b7 .. \u00b7\u00b7\u00b7\u00b7\u00b7\u00b7\u00b7\u00b7\u00b7\u00b7\u00b7\u00b7 ............... 18\n            b. Count IV: Section 12(a)(2) Claim .................................................................................. 19\n            c. Count V: Section 15 Claim ............................................................................................ 19\nIII. Conclusion......................................................................................................................................... 19\n\f           Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 2 of 19\n\n\n\n        Lead Plaintiff James Pappas brought this securities class action against defendant\nQutoutiao Inc. (\"QTI\"), a Chinese news-aggregation app, its directors and officers, and its\ncorporate underwriters. In his Consolidated Amended Class Action Complaint (\"the\nComplaint\") Lead Plaintiff alleges claims under the Securities Act of 1933 and the Securities\nExchange Act of 1934 relating to QTI' s initial public offering (\"IPO\") and secondary public\noffering (\"SPO\").\n        QTI and one of its directors, Oliver Yucheng Chen, have moved for dismissal of the\nComplaint pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim (\"the QTI Motion\").\nUnderwriter Defendants similarly moved for dismissal, joining the arguments set forth in the\nQTT Motion and asserting additional grounds.\n        For the reasons set forth below, the Court grants both motions.\n\nI.   BACKGROUND\n\n     A. QTT\n\n        QTT operates mobile platforms that distribute and share entertainment content in China.\nThe QTI app aggregates articles and videos from content providers and presents customized\nfeeds to app users. QTI generates the majority of its revenue through advertising. (Comp!. 'll'll\n58, 61.)\n        On September 14, 2018, QTI announced its IPO of 12,000,000 American Depositary\nShares (\" ADS\") at a price of $7 per share. In connection with the IPO, QTI filed with the\nSecurities and Exchange Commission (\"SEC\") its third and final amendment to its previously\nfiled-but not yet effective-registration statement on Form F-1 that took effect on September\n13. On September 14, QTI filed its prospectus on Form 424B4 (\"IPO Prospectus,\" and together\nwith the IPO Registration Statement, the \"IPO Offering Documents\"). The IPO closed on\nSeptember 18, 2018. (Comp!. 'll 62.)\n        On March 29, 2019, QTI announced an SPO of 10,000,000 QTI ADSs at a price of $10 per\nshare. In connection with the SPO, QTI filed with the SEC its only amendment to the\npreviously filed-but not yet effective-registration statement on Form F-1 that took effect on\nApril 2. On April 3, QTI filed its prospectus on Form 424B4 (the \"SPO Prospectus\"). The SPO\nclosed on April 5, 2019. (CompI. 'll 64.)\n        QTI reported third quarter 2020 financials on December 16, 2020 that allegedly\ntriggered a significant share price decline. (CompI. 'll 90.) Consequently, Lead Plaintiff argues\nthat the relevant class period for this action is between September 14, 2018 and December 16,\n2020. (Id. 'll l.)\n\n     B. Parties\n\n        Lead Plaintiff purchased QTI securities during the class period and alleges that he\nsuffered damages arising from federal securities law violations. (Comp!. 'll 22.)\n        The Complaint names four classes of defendants. The first is QTI itself. The Complaint\nthen lists four Insider Defendants: Eric Tan (\"Tan\"), the co-founder of QTI and the Company's\nChief Executive Officer (\"CEO\") since May 20, 2019; Lei Li, the co-founder of QTI and director\n\n\n                                                2\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 3 of 19\n\n\n\nand CEO of the Company until May 2019; Jingbo Wang, a director and QTI's Chief Financial\nOfficer (\"CFO\") until January 22, 2020; and Xiaolu Zhu, the Company's CFO since January 22,\n2020 (collectively, \"the Insider Defendants\"). (Id.'['[ 24-29.)\n        Next, the Complaint names six Director Defendants: Shaoqing Jiang, a director and a\nmember of QTI' s Audit Committee and Compensation Committee until September 2019; Jianfei\nDong, at all relevant times a director and co-president; Oliver Yucheng Chen, at all relevant\ntimes a director and the Chief Strategy Officer from August 2018 to February 2020; Yongbo Dai,\na director beginning in November 2018; James Jun Peng, at all relevant times a director of the\ncompany; and Feng Li, at all relevant times a director and a previous Chair of the Audit\nCommittee (collectively, \"the Director Defendants\"). (Id. '['[ 30-35.)\n        Finally, the Complaint lists nine Underwriter Defendants: Citigroup Global Markets\nInc.; Deutsche Bank Securities Inc.; China Merchants Securities (HK) Co., Ltd., a China-based\ncompany principally engaged in financial services; UBS Securities LLC; Keybanc Capital\nMarkets, Inc.; CLSA Limited; Haitong International Securities Company Limited; Jefferies\nGroup LLC; and Lighthouse Capital International Inc., also known as Guangyuan Capital or\nGuangyuan Ziben, a China-based company that operates as a boutique investment bank\n(collectively, \"the UW Defendants\"). (Id. '['[ 37-45.)\n\n    C. Claims\n\n        Lead Plaintiff's claims arise out of the 1934 Exchange Act and the 1933 Securities Act.\nThe 1934 Exchange Act claims pertain to QTI, the Insider Defendants, and the UW Defendants\n(collectively, the \"1934 Exchange Act Defendants\") (Comp!.'[ 53), and the 1933 Securities Act\nclaims pertain to QTI, the Director Defendants, and the UW Defendants (collectively, the \"1933\nSecurities Act Defendants\") (Comp!. '[ 56).\n        Count I alleges that QTI, the Insider Defendants, and the UW Defendants committed\nsecurities fraud by violating Section lO(b) of the Securities Exchange Act, 15 U.S.C. \u00a7 78j(b), and\nRule lOb-5, 17 C.F.R. \u00a7 240.lOb-5, promulgated thereunder. Count II alleges that the Insider\nDefendants are liable for securities fraud as controlling persons pursuant to Section 20( a) of the\nSecurities Exchange Act, 15 U.S.C. \u00a7 78t(a). Count III alleges that QTI, the Director Defendants,\nand the UW Defendants made materially false or misleading statements in violation of Section\n11 of the 1933 Securities Act. Count IV alleges that QTI and the UW defendants violated Section\n12(a)(2) of the Securities Act, which makes liable any person who offers a security by means of a\n\"prospectus ... which includes an untrue statement of a material fact or omits to state a material\nfact necessary in order to make the statements, in light of the circumstances under which they\nwere made, not misleading.\" 15 U.S.C. \u00a7 77l(a)(2). Finally, Count V alleges that Director\nDefendants violated Section 15 of the Securities Act, which makes \"controlling persons\" or\nentities jointly and severally liable for any violations of Sections 11 and 12 committed by those\nwithin their charge. 15 U.S.C. \u00a7 770.\n\n\n\n\n                                                 3\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 4 of 19\n\n\n\n\nIL   DISCUSSION\n\n     A. 1934 Exchange Act Claims\n\n       Lead Plamtiff pleads securities fraud-based claims under sections lO(b) and 20(a) of the\n1934 Exchange Act and SEC Rule l0b-5, 17 C.F.R. \u00a7 240.lOb-5, promulgated thereunder, against\nthe 1934 Exchange Act Defendants (Comp 1. 'l[ 123), accusing them of knowingly or recklessly\nmaking materially false and misleading public statements and omissions. The Complaint\ncontends that:\n    \u2022 Qutoutiao was not able to generate sufficient revenue to meet its revenue targets unless\n       it allowed unqualified advertisers to advertise on the QTT App, which it accomplished\n       by targeting consumers who lived in lower-tier Chinese cities;\n    \u2022 The true reason why QTT replaced its advertising agent, Baidu, with a related party,\n       Dianguan, was to bypass Baidu' s oversight of the content and quality of advertisements\n       and thereby generate increased revenue from risky advertisements;\n    \u2022 QTT had created separate teams for 1) dealing with qualified advertisers, whose\n       advertisements were largely compliant with applicable Chinese regulations and thus\n       low risk, and 2) dealing with unqualified advertisers, and that the \"high-risk\" team\n       (which was disbanded after an expose by the China Central Television \"CCTV\"\n       network) outsourced nearly all of its advertisement screening to contractors who\n       conducted minimal due diligence on their clients;\n    \u2022 As a result, QTT would place risky advertisements on the QTT App whose claims could\n       not be substantiated and thus were considered false advertisements under applicable\n       regulations or which were linked to illegal online gambling platforms;\n    \u2022 As a result, QTT faced increasing regulatory scrutiny and reputational harm;\n    \u2022 As a result, QTT' s advertising revenue was reasonably likely to decline;\n    \u2022 QTT was reporting RMB 620 million more in revenue to the SEC than its subsidiaries\n       did in aggregate to the Chinese government's State Administration for Market\n       Regulation (\"SAMR\");\n    \u2022 As a result of the foregoing, defendants' positive statements about QTT' s business,\n       operations, and prospects were materially misleading and/or lacked a reasonable basis.\n(Compl. 'l[ 124.)\n\n         1.   Motion to Dismiss\n\n         In evaluating a motion to dismiss a complaint pursuant to Rule 12(b)(6), the Court must\naccept the truth of the facts alleged in the complamt and draw all reasonable inferences in favor\nof the plaintiff. Global Network Commc'ns, Inc. v. City of New York, 458 F.3d 150, 154 (2d Cir. 2006).\nA complaint should be dismissed if it fails to set forth \"enough facts to state a claim for relief\nthat is plausible on its face.\" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). \"A claim has\nfacial plausibility when the plaintiff pleads factual content that allows the court to draw the\nreasonable inference that the defendant is liable for the misconduct alleged. The plausibility\nstandard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility\n\n\n\n                                                  4\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 5 of 19\n\n\n\nthat a defendant has acted unlawfully.\" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting\nTwombly, 550 U.S. at 556).\n        Here, the Court \"may consider' any written instrument attached to [the Complaint] as\nan exhibit or any statements or documents incorporated in it by reference, as well as public\ndisclosure documents required by law to be, and that have been, filed with the SEC, and\ndocuments that the plaintiffs either possessed or knew about and upon which they relied in\nbringing the suit.\"' City of Pontiac Policemen's & Firemen's Ret. Sys. v. UBS AG, 752 F.3d 173, 179\n(2d Cir. 2014) (quoting Rothman v. Gregor, 220 F.3d 81, 88 (2d Cir. 2000)).\n\n         2.   Standard of Review\n\n         A complaint alleging securities fraud is subject to two heightened pleading standards.\nFirst, the complaint must satisfy Rule 9(b), which requires that it \"state with particularity the\ncircumstances constituting fraud.\" Fed. R. Civ. P. 9(b); see ATSI Commc'ns., Inc. v. Shaar Fund,\nLtd., 493 F.3d 87, 99 (2d Cir. 2007). Second, the complaint must meet the pleading requirements\nof the Private Securities Litigation Reform Act (\"PSLRA\"), 15 U.S.C. \u00a7 78u-4(b), which \"insists\nthat securities fraud complaints 'specify' each misleading statement; that they set forth the facts\n'on which [a] belief' that a statement is misleading was 'formed'; and that they 'state with\nparticularity facts giving rise to a strong inference that the defendant acted with the required\nstate of mind.\"' Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 345 (2005) (quoting 15 U.S.C. \u00a7\u00a7 78u-\n4(b)(l), (2)).\n\n              a.   Count I: Section lO(b) Claims Under the 1934 Exchange Act\n\n        To state a claim for securities fraud pursuant to Section lO(b) and Rule lOb-5, \"a plaintiff\nmust allege that [each] defendant (1) made misstatements or omissions of material fact, (2) with\nscienter, (3) in connection with the purchase or sale of securities, (4) upon which the plaintiff\nrelied, and (5) that the plaintiff's reliance was the proximate cause of its injury.\" Ind. Pub. Ret.\nSys. v. SAIC, Inc., 818 F.3d 85, 93 (2d Cir. 2016) (quotingATSI Commc'ns, Inc., 493 F.3d at 105).\nAll elements are necessary. To be material within the meaning of Section l0(b), \"the alleged\nmisstatement must be sufficiently specific for an investor to reasonably rely on that statement as\na guarantee of some concrete fact or outcome which, when it proves false or does not occur,\nforms the basis for a\u00a7 lO(b) fraud claim.\" City of Pontiac Policemen's & Firemen's Ret. Sys. v. UBS\nAG, 752 F.3d 173, 185 (2d Cir. 2014).\n         Defendants maintain that this count should be dismissed because 1) it fails to allege\nactionable misstatements or omissions, and 2) it inadequately alleges that defendants acted with\nscienter.\n\n                   i.   Misstatements or Omissions of Material Fact\n\n        A plaintiff may bring a claim pursuant to Section lO(b) and Rule l0b-5 based on either\naffirmative misstatements or omissions of material fact. \"A securities fraud complaint based on\nmisstatements must (1) specify the statements that the plaintiff contends were fraudulent, (2)\nidentify the speaker, (3) state where and when the statements were made, and (4) explain why\n\n\n                                                  5\n\f         Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 6 of 19\n\n\n\nthe statements were fraudulent.\" ATS[ Commc'ns., 493 F.3d at 99 (citing Novak v. Kasaks, 216 F.3d\n300,306 (2d Cir. 2000)). A securities fraud complaint based on omissions must allege that \"the\ncorporation is subject to a duty to disclose the omitted facts.\" In re Optionable Sec. Litig., 577 F.\nSupp. 2d 681, 692 (S.D.N.Y. 2008) (quoting In re Time Warner Inc. Sec. Litig., 9 F.3d 259,267 (2d\nCir. 1993)). A corporation is \"not required to disclose a fact merely because a reasonable\ninvestor would very much like to know that fact.\" Id. (quoting In re Time Warner, 9 F.3d at 267).\n         Nevertheless, a \"duty to disclose' arises when disclosure is necessary to make prior\nstatements not misleading.\"' Beleson v. Schwartz, 599 F. Supp. 2d 519,525 (S.D.N.Y. 2009)\n(quoting In re Time Warner, 9 F.3d at 268). \"Even when there is no existing independent duty to\ndisclose information, once a company speaks on an issue or topic, there is a duty to tell the\nwhole truth.\" Meyer v. Jinkosolar Holdings Co., 761 F.3d 245, 250 (2d Cir. 2014).\n         \"'The test for whether a statement is materially misleading under Section lO(b )' is not\nwhether the statement is misleading in and of itself, but 'whether the defendants'\nrepresentations, taken together and in context, would have misled a reasonable investor.\"' In re\nVivendi, S.A. Sec. Litig., 838 F.3d 223,250 (2d Cir. 2016) (quoting Rombach v. Chang, 355 F.3d 164,\n172 n.7 (2d Cir. 2004)). \"[T]he lack of an independent duty is not ... a defense to ... liability\nbecause upon choosing to speak, one must speak truthfully about material issues.\" Caiola v.\nCitibank, N.A., 295 F.3d 312, 331 (2d Cir. 2002).\n        The alleged misstatement or omission must also have been material. \"At the pleading\nstage, a plaintiff satisfies the materiality requirement of Rule lOb-5 by alleging a statement or\nomission that a reasonable investor would have considered significant in making investment\ndecisions.\" Ganino v. Citizens Utils. Co., 228 F.3d 154, 161 (2d Cir. 2000). \"Because materiality is a\nmixed question of law and fact, in the context of a Fed. R. Civ. P. 12(b)(6) motion, 'a complaint\nmay not properly be dismissed ... on the ground that the alleged misstatements or omissions\nare not material unless they are so obviously unimportant to a reasonable investor that\nreasonable minds could not differ on the question of their importance.\"' ECA & Local 134 IBEW\nJoint Pension Trust of Chicago v. JP Morgan Chase Co., 553 F.3d 187, 197 (2d Cir. 2009) (quoting\nGanino, 228 F.3d at 162).\n         Because the Court finds that the Complaint fails to adequately plead the first prong of\nthe Section lO(b) standard-that defendants made misstatements or omissions of material fact-\nit declines to address the remaining requirements to state a Section lO(b) claim. The Court will\naddress each of the alleged misstatements or omissions of material fact raised in the Complaint\nin turn.\n                                   a) QTT's Strategy of Rapidly Growing Revenues Through\n                                       Intentional Placement of Illegal Advertisements\n\n       Lead Plaintiff contends that \"[c]entral to QTT's strategy of rapidly growing its revenues\nwas the intentional placement of non-conforming, and, in many cases, illegal advertisements on\nits mobile applications.\" (Comp!. 'I[ 79.) The Complaint avers that QTT's \"fraud was not\ndisclosed to investors\" (Comp!. at 23) and that \"QTT actively took steps to evade government\nregulations and encouraged the placement of illegal ads on its platform.\" (Comp!. at 26.)\n       Specifically, Lead Plaintiff claims that\"[ d]efendants' statements about QTT' s business\nmodel and success were misleading and actionable half-truths.\" (Plaintiff's Opp. at 15.)\n\n\n                                                  6\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 7 of 19\n\n\n\n        The Complaint alleges that QTI' s publicly stated reasons for acquiring advertising agent\nDianguan were false or misleading because \"the Company acquired an advertising agent\n[Dianguan] in February 2018 to reduce the oversight that Baidu had been providing which had\nprevented non-compliant ads from running.\" (Comp!. 'II 129.) Lead Plaintiff further urges that\n\"other than eliminating oversight, the replacement of Baidu with Dianguan made no sense.\nBaidu was reputable, stable, and lucrative; Dianguan was a startup that had been formed just\nfour months before its acquisition by QTI\" and that\"[ d]efendants knew they could flood the\nQTI App with a continuous, profitable stream of illegal advertisements that Dianguan would\nnot censor.\" (Plaintiff's Opp. at 7.)\n        QTI Defendants, however, note that SEC Form 20-F Annual Report for FY 2019 shows\nthat \"Qutoutiao made detailed disclosures regarding the business reasons for acquiring\nDianguan, such as enhanced monetization efficiency and long-term business independency.\"\n(QTI Mot. at 13 & n.11.) QTI Defendants contend that \"the Complaint includes no well-\npleaded factual allegation that contradicts these disclosures.\" (Id.)\n        The QTI Defendants are correct. Plaintiff has not pied non-conclusory facts, if accepted\nas true, that would suggest that QTI' s motivation for acquiring Dianguan was anything other\nthan what QTI publicly disclosed in its SEC filings. Plaintiff has therefore failed to make an\nadequate showing that any of the defendants made a misstatement or omission of material fact\nregarding QTI' s motivation for acquiring Dianguan.\n        The Complaint also states that QTI had \"separate teams\" for qualified versus\nunqualified advertisers, but its sole factual support for this allegation comes from a confidential\nwitness (a former QTI Sales Director) who claims that during his fourteen months of\nemployment in 2019-2020, there were two teams that \"operated independently\": one team\nworked with \"well-known and qualified advertisers, who were largely compliant\" and the\nsecond team \"mainly dealt with unqualified advertisers whose advertisements were 'risky.\"'\n(Comp!. 'I[ 81.) The former Sales Director says that he \"did not deal with unqualified\nadvertisers\" and does not claim that he ever supervised any employees who dealt with\nunqualified advertisers. (Id.)\n        The Complaint lacks specificity in its factual assertion that the \"second team was\ndisbanded after the Company's practice of promoting illegal advertisements was exposed on\nChinese state-TV in July 2020.\" (Id.) Although the Complaint states multiple times that QTI\n\"disbanded\" the second advertising team (id. '11'1155, 124, 148, 157, 194,206,244, 260, 270), Lead\nPlaintiff's counsel could offer no factual support for this assertion at oral argument.\n         When asked at oral argument to point to specific allegations that QTI had developed a\nstrategy to increase the placement of illegal ads, counsel for Lead Plaintiff responded that \"it's\npart and parcel of the totality of the circumstances. There is no specific allegation that says, in\nthis meeting, these defendants came together with a strategy ... \" (ECF No. 102, at 11.) Therein\nlies the problem. Claims arising under Section lO(b) cannot be supported by a mere \"totality of\nthe circumstances\" argument; the Complaint must include facts supporting the allegation that\nthere was a strategy to intentionally place illegal advertisements.\n         Because Lead Plaintiff has not stated with particularity the circumstances constituting\nfraud, the Complaint fails to state a Section lO(b) claim grounded in the assertion that QTI had\n\n\n\n\n                                                 7\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 8 of 19\n\n\n\na strategy of rapidly growing revenue by intentionally placing illegal ads on its app and failed\nto disclose that strategy.\n\n                                 b) QTI's Failure to Disclose Knowledge of Illicit\n                                    Advertising as a Key Driver of Revenue Growth\n\n        Plaintiff also argues that \"while publicly identifying specific factors that supposedly\ndrove QTI' s revenues, Defendants failed to disclose that illicit advertising was a key driver of\nthe Company's increasing revenues.\" (Plaintiff's Opp. at 15.)\n        Specifically, the Complaint alleges that QTI' s public statements contained in 11 128,\n142, 144-147, 153, 163,195,202, 210-12, 214-15, 217-19, 245-46, 248-50 were \"materially false and\nmisleading\" because any increase in advertising revenue \"was primarily due to\" or\" due to\"\n\"the increase in ads whose claims could not be substantiated and thus were considered false\nadvertisements under applicable regulations or provided links to illegal online gambling\nplatforms.\" (Comp!. 11129, 143, 148, 154, 164, 196, 203,213,216, 220, 247, 251.)\n        The Complaint similarly contends that several statements (Comp!. 11138, 167, 188, 236)\nwere false and misleading because \"a material number of the Company's customers were\nunqualified advertisers who were purchasing non-compliant ads\" (Comp!. 11139, 168, 237),\nwithout ever alleging, even approximately, how many of QTI' s customers were unqualified\nadvertisers or what portion of QTI' s revenues were derived from such advertisers. Relatedly,\nthe Complaint contends that \"until December 2020, Defendants never disclosed to investors that\na substantial amount of QTI' s revenue was generated from illegal advertisements paid for by\nshady unqualified advertisers which did not comply with applicable Chinese regulations and\nthat they were managing the risk of losing that revenue by reducing the chance of getting\ncaught by state regulators by placing those advertisements in lower tier Chinese cities.\" (Comp!.\n193.)\n        The Complaint therefore avers that QTI (i) had full knowledge of the scale of illicit\nactivity, (ii) knew that the illicit activity was a substantial share of QTI' s revenues, and (iii) had\na duty to disclose this fact but failed to do so.\n        However, the Complaint's factual assertions do not offer any indication as to the\nmagnitude of the allegedly illicit advertising activity. For instance, although the Complaint\nseeks to rely on confidential witness accounts, these do not indicate that illegal advertising\ncomprised any more than - at most- a nominal share of QTI' s revenues. The Complaint cites to\na November 28, 2018 CC1V claim that QTI violated advertising guidelines related to \"vulgar\ncontent\" and to a June 18, 2019 Shanghai Municipal Market Supervision Bureau (\"Shanghai\nRegulator\") preliminary investigation finding of \"severely illegal advertisements\" on QTI and\nrelated platforms. (Comp!. 11266, 269.) These public reports, as well as the other incidents cited\nby the Complaint, fail to support an inference that QTI would have had knowledge that illicit\nadvertisements contributed to more than a nominal amount of QTI' s revenue prior to the July\n15, 2020 CC1V report. (See Comp!. 188.)\n        When asked to clarify this point at oral argument, Lead Plaintiff's counsel cited the 20\npercent revenue drop QTI suffered after the CC1V report regarding illegal advertisements was\naired. However, this percentage does not represent the percentage of illegal advertisements\n\n\n\n                                                   8\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 9 of 19\n\n\n\ncontributing to QTT' s revenue. The Complaint provides no support for its assertion that\" a\nsubstantial amount\" of revenue came from illegal advertisements. Furthermore, Lead Plaintiff's\ncounsel presented no information to contradict defense counsel's assertion that the revenue\ndrop was due to QTT' s significant remedial efforts after the CCTV reports aired and that in fact\nthe illegal advertisements made up only a very small percentage of QTT's overall advertising.\n(ECF No. 102, at 3-7.)\n         All of the Complaint's related factual assertions are wholly conclusory. Because the\nComplaint does not plausibly allege that a significant share of QTT' s advertising revenue was\ntied to illicit advertisements, the Complaint offers no support for the claim that the 1934\nExchange Act Defendants \"failed to adequately warn investors that certain 'Risk Factors' had\nalready materialized at the time of the IPO\" (Comp1. 'l[ 135), the SPO (id. 'l[ 166), the 2018 20-F\nannual report (id. 'l[ 185), and the 2019 20,F annual report (id. 'l[ 233).\n         The Complaint offers limited factual support for QTT' s evolving knowledge of\nsuspected illicit advertisements on its platform. Namely, the Complaint notes that by July 18,\n2020, \"228 complaints had been filed on Black Cat Complaints-a Chinese consumer rights\nprotection group-regarding the proliferation of false advertisements on the QTT App.\" The\nComplaint offers no such data as to the number of complaints prior to the major CCTV report\nthat could plausibly indicate greater QTT awareness of illicit advertisements on its platform\nprior to July 2020.\n         Because Lead Plaintiff does not adequately allege the scale of illicit advertising activity\nand does not sufficiently allege QTT' s knowledge of illicit advertisements on its platform, the\nComplaint fails to state a Section lO(b) claim grounded in this factual assertion.\n\n                                c) QTT's Statements Regarding Screening of Illegal\n                                   Advertisements\n\n        Plaintiff contends that \"to further mislead investors about QTT's reliance on revenue\nfrom illegal advertisements, Defendants created the false impression that QTT successfully\nscreened out illegal advertisements.\" (Plaintiff's Opp. at 15, citing Comp1. 'l['l[ 68, 130, 133, 136,\n170, 181, 229.) Lead Plaintiff notes that this occurred both in QTT's SEC filings as well as\nthrough defendant Tan's statements. (Id. at 16.)\n        Lead Plaintiff's arguments here take two forms: first, that QTT actively misled investors\non the nature of its screening technology to prevent illicit advertisements (which all parties\nagree were a risk to QTT) and second, that Tan made affirmative statements touting QTT' s\nscreening capacity while aware that QTT' s controls were at the time of his statements ineffective\nat ensuring compliance with Chinese law.\n        Indeed, in QTT's IPO Offering Documents, its 2018 20-F, and its 2019 20-F, the Company\nstates that \"[w]e actively monitor the advertisements placed to help ensure their relevance.\"\n(Comp. 'l['l[ 131, 179, 226.) Plaintiff urges that QTT held itself out as providing superb ability to\nscreen out illicit advertisements, including through the use of proprietary \"artificial\nintelligence\" that could \"monitor and identify objectionable visual content with a high degree of\naccuracy\" and flag \"suspicious content for manual review.\" (Compl. 'l[ 13.)\n\n\n\n\n                                                  9\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 10 of 19\n\n\n\n         However, as QTT Defendants observe, QTT' s reference to \"artificial intelligence\"\nreferred to QTT' s core content to consumers, not to the advertisements that generated its\nrevenue. \"The disclosures Plaintiff attacks are not about advertising regulations at all-they\nrelate to Qutoutiao's compliance with PRC regulations that govern content, such as news\narticles.\" (QTT Reply, ECF No. 62, at 1.)\n         Furthermore, even if QTI' s statements led an investor to believe that the company\nmanually reviewed each advertisement to ensure that there was zero risk of placing an illicit\nadvertisement on its platform, QTT' s disclosure documents leave no doubt that investors were\nwarned of the risks. The IPO Offering Documents stated that \"our employees responsible for\nreviewing advertisements may not fully understand the relevant laws and regulations or may\nbe inappropriately influenced by the advertisers\" and the 2018 20-F warned that \"advertisers on\nour mobile applications, or their agents, may use measures that are designed to evade our\nmonitoring, such as providing inauthentic material that does not match the actual\nadvertisement ... \"(See Comp!. 'l[ 136, 186.) Elsewhere, QTT discloses that it \"cannot assure you\nthat all the advertisements shown on our mobile applications are true, accurate, appropriate\nand in full compliance with applicable laws and regulations.\" (Id.)\n         Finally, Lead Plaintiffs also cite to Tan's assertion on a September 5, 2019 financial\nearnings call that \"[w]e have one of the best track records in compliance among all the sizeable\nnewsfeed players in the space as we have put in significant efforts from the very beginning in\nbuilding our content compliance teams and capabilities.\" (Comp!. 'l[ 205.)\n         Lead Plaintiff argues that Tan's statements were classically violative of the Second\nCircuit standard set forth in Meyer v. Jinkosolar Holdings Co., Ltd. 761 F.3d 245, 251 (2d Cir. 2014),\nin that they wrongly \"gave comfort to investors that reasonably effective steps were being\ntaken\" even though QTT failed to disclose that its measures \"were then failing to prevent\nsubstantial violations of the Chinese regulations.\" (Plaintiff's Opp. at 16.)\n         Yet for reasons substantially similar to those set forth above, Lead Plaintiff has not\nplausibly alleged that Tan or QTT had awareness as of September 5, 2019 that QTT was \"then\nfailing to prevent substantial violations of the Chinese regulations.\" Moreover, the Complaint\ndoes not offer factual pleadings to indicate that QTT' s competitors had better \"track records\" in\nthat regard.\n         The Complaint also alleges that Tan's statements in a 4Q18 Earnings Call that \"the\nquality of our advertisers has consistently improved since we went public\" were materially\nfalse or misleading. But this statement and its ilk are best construed as inactionable puffery. See\nIn re Banco Bradesco S.A. Sec. Litig., 277 F. Supp. 3d 600, 647 (S.D.N.Y. 2017).\n         Moreover, the Complaint mischaracterizes QTT' s public statements to suggest that QTT\nsomehow promised to \"stop the Company from running non-compliant ads on advertisers'\nbehalf in lower tier cities\" (Comp!. 'l[ 157); in fact, as described above, QTT had repeatedly\ndisclosed the risk that unlawful advertisements could appear on its platform.\n         The Complaint further alleges that Tan's September 22, 2020 statements on a 2Q20\nEarnings Call, including that \"we have already seen a trend of recovery and we are seeing the\ngrowth and recovery will continue in Q4\" were materially false and misleading. (Comp!. 'l['l[\n255-56.) Specifically the Complaint alleges that \"Tan continued to materially\n\n\n\n\n                                                  10\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 11 of 19\n\n\n\n\nmisrepresent ... the extent to which the CCTV Expose would continue to impact the\nCompany's business operations and financials.\" (Compl. 'l[ 256.)\n        While Tan's assertion that \"we are seeing the growth and recovery will continue in Q4\"\ncould suggest that the CCTV reports would not have had a major impact on QTT' s financial\nperformance, Tan immediately thereafter used far more cautionary language about his\nexpectations, including that QTT is \"still evaluating the extent of such impacts.\" (Compl. 'l[ 257.)\nThis cautionary language from Tan would preclude a reasonable investor from basing an\ninvestment decision on Tan's vague and highly optimistic statement that \"we are seeing the\ngrowth and recovery will continue in Q4.\" (Compl. 'l[ 255.)\n        Last, Tan's statement on the 2Q20 Earnings Call that \"[w]e have always closely followed\nmies and regulations of the industry and the country\" is best construed as inactionable puffery.\nSee Singh v. Cigna Corp., 918 F.3d 57, 63 (2d Cir. 2019) (\"We have observed that general\nstatements about reputation, integrity, and compliance with ethical norms are inactionable\n'puffery,' meaning that they are too general to cause a reasonable investor to rely upon them.\")\nThis statement would not reasonably be seen as providing an investor with assurances that QTT\nhad never engaged in conduct that might even unintentionally violate U.S. securities law or\nwhat the parties agree is China's complex and unpredictable enforcement regime.\n        Because the Complaint fails to adequately allege that QTT or Tan misled investors\nthrough its statements concerning internal QTT screening of content and advertisements, the\nComplaint fails to state a Section lO(b) claim grounded in this factual assertion.\n\n                                d) QTT's Failure to Disclose Related-Party Transactions\n\n       Lead Plaintiff also argues that defendants failed to disclose related-party transactions as\nrequired under Generally Accepted Accounting Principles (\"GAAP\") and SEC Regulation S-X\n(Comp 1. 'l['l[ 102-3) and the Financial Accounting Standards Board (\"FASB\") Accounting\nStandards Codification (\" ACS\") 850, (Compl. 'l[ 104). Examples of related parties under FASB\nASC 850 include:\n    \u2022 Affiliates of the entity.\n    \u2022 Principal owners of the entity and members of their immediate families;\n       management of the entity and members of their immediate families.\n    \u2022 Other parties with which the entity may deal if one party controls or can\n       significantly influence the management or operating policies of the other to an\n       extent that one of the transacting parties might be prevented from fully pursuing\n       its own separate interests.\n    \u2022 Other parties that can significantly influence the management or operating\n       policies of the transacting parties or that have an ownership interest in one of the\n       transacting parties and can significantly influence the other to an extent that one\n       or more of the transacting parties might be prevented from fully pursuing its own\n       separate interests.\nCompl. 'l[ 104n.35 (quoting ASC 850-10-20).\n       Lead Plaintiff alleges that QTT made omissions of material facts in the IPO Prospectus,\nthe SPO Prospectus, the 2018 20-F, and the 2019 20-F in regard to disclosing related-party\n\n\n\n                                                 11\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 12 of 19\n\n\n\ntransactions. (Comp!. 'I[ 107.) First, plaintiff contends that because Dianguan's founder, Liang,\nhad \"a close business relationship with Tan (Compl. 'I[ 109), QTT's acquisition of Dianguan was\na related-party transaction that was not properly disclosed. (Compl. '['I[ 107-10.) Second, Lead\nPlaintiff contends that \"Defendants failed to disclose that Mengtui, Fangce, and Shihui Miao-\nadvertisers who appear to generate about 30% of the advertisements on the QTT App-were\nrelated parties benefitting Defendant Tan.\" (Plaintiff's Opp. at 17, citing Compl. '['I[ 112-15.)\nLead Plaintiff contends that such disclosures were \"material related-party transactions\" that\nQTT was obligated to disclose.\n        The QTT IPO Prospectus, SPO Prospectus, 2018 20-F, and 2019 20-F each included a\nsection entitled \"Related Party Transactions,\" including a subsection labelled \"Transactions\nwith Companies Controlled by or Affiliated with Mr. Tan.\" (Compl. 'I[ 107.) The below analysis\nfirst considers the claim regarding Dianguan, and then turns to the claims regarding Mengtui,\nFangce, and Shihui Miao.\n\n                                          1) Dianguan\n\n         According to the Complaint, Xiang \"Sean\" Liang (\"Liang\") founded Dianguan a mere\nfour months before QTT acquired it in February 2018 and was its director and legal\nrepresentative at that time. (Compl. 'I[ 108.) The Complaint argues that Dianguan \"would have\nbeen prevented from 'fully pursuing its own separate interest\"' (id. 'I[ 111), on account of Tan's\nalleged ability to \"significantly influence the management or operating policies of [Dianguan,\nthrough Tan's influence on Liang] ... to the extent that [Dianguan] might be prevented from\nfully pursuing its own separate interests.\" (Id. 'I[ 104 n.35, quoting ASC 850-10-20) (emphasis\nadded).\n         The Complaint offers two factual assertions to support its contention that Liang was a\nrelated party at the time QTT acquired Dianguan. First, Liang was \"the director of domestic\ninvestment in a company,\" which \"was the executive partner of a company that Defendant Tan\nhad been the majority investor in since February 26, 2018.\" Compl. 'I[ 109 (noting Tan held 64.5%\nof equity in the Nantong WooFoo Jinxin Equity Investment Fund Partnership and that Liang\nwas the director of domestic investment at Nantong WooFoo Jinxin Investment Management\nCo. Ltd.) Yet because QTT acquired Dianguan on February 2, 2018, see Qutoutiao Inc., Annual\nReport (Form 20-F), at F-8 (Apr. 11, 2019), Lead Plaintiff's factual assertion does not suggest that\nTan's involvement with Nantong WooFoo Jinxin Equity Investment Fund Partnership\n(commencing February 26) preceded QTT' s acquisition of Dianguan (on February 2).\n         Second, during 2016, Liang was the investment director of Shanghai Taiyun Investment\nManagement Co. Ltd. (\"Taiyun Capital\"), a company in which Tan held 99% of the equity and\nTan's sister held the remaining 1% equity interest. (Compl. 'I[ 110.) Lead Plaintiff further notes\nthat in July 2018 (months after the February 2018 acquisition of Dianguan), Tan held a position\nof \"business consultant\" for Taiyun Capital. (Comp1. 'I[ 110.) Last, Lead Plaintiff states that Tan's\nsister is listed as a legal representative and director of Taiyun Capital and that Liang is still\nlisted as an investment assistant for Taiyun Capital on a Chinese website that tracks technology\ncompanies. (Compl. 'I[ 110.) Taken together, Lead Plaintiff's factual assertions are designed to\n\n\n\n\n                                                 12\n\f       Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 13 of 19\n\n\n\nimply that Tan (or his sister) has exercised some element of control over Liang from 2016\nthrough at least QTT' s acquisition of Dianguan in February 2018.\n        Although Lead Plaintiff has demonstrated a likelihood that \"Liang had a close business\nrelationship with Defendant Tan\" (Compl. 'l[ 109), he does not elaborate on how their \"business\nrelationship was so intertwined such that Dianguan would have been prevented from 'fully\npursuing its own separate interests' and that disclosure would have 'shed light on revenues\ngenerated from transactions with Dianguan prior to its acquisition and the reasons for acquiring\nDianguan and replacing Baidu.\"' (Comp1. 'l[ 111.) Lead Plaintiff's suggestion that Tan has all-\npurpose control over Liang is quite speculative. The simple presence of a business relationship\nbetween Tan and Liang is insufficient to trigger a duty to disclose. See Tabor v. Bodisen Biotech,\nInc., 579 F. Supp. 2d 438, 450-51 (S.D.N.Y. 2008).\n         Because the Complaint fails to adequately plead that the relationship between Dianguan\nand Tan was so intertwined that Dianguan might have been prevented from fully pursuing its\nown interests, it cannot support its contention that QTT failed to report its acquisition of\nDianguan as a related-party transaction and thereby fails to state a Section lO(b) claim\ngrounded in this factual assertion.\n\n                                         2)   Mengtui, Fangce, and Shihui Miao\n\n       Plaintiff urges that QTT failed to disclose related-party transactions involving three\nadvertisers: (i) one of QTT' s top advertisers Mengtui, who has \"the copyright and website\noperating licenses ... held by Shanghai Tujin Network Technology Co. Ltd., (ii) Publisher\nShanghai Fangce Network Technology Co. Ltd. (\"Fangce\"), and (iii) Shihui Miao, whose\n\"website operating licenses and software authorship rights are owned by Shanghai Xihu\nCulture Communications Co. Ltd.\" (Compl. 'l['l[ 112-14.)\n        Although defendants do not contest that QTT' s transactions with Mengtui, Fangce, and\nShihui Miao were related-party transactions, these transactions were disclosed in QTT's 2019\nannual report-the first annual report after these alleged related-party transactions took place.\n(ECF No. 102, at 42.) Counsel for Lead Plaintiff cited no requirement that companies disclose\nrelated-party transactions in real time and the Court has found none.\n        For these reasons the Complaint fails to adequately plead that QTT did not disclose\nrelated-party transactions at the appropriate time and thereby fails to state a Section lO(b) claim\ngrounded in this factual assertion.\n\n                                e) QTT's Inflation of Revenue for U.S. Filings\n\n        Lead Plaintiff contends that QTT' s 2017 and 2018 consolidated revenues in its SEC\nfilings are materially higher than the 2017 and 2018 revenues reported to SAMR. (Compl. 'l[\n116.)\n        However, as the Complaint itself recognizes, \"SAMR filings ... employ different\naccounting principles than U.S. GAAP, so it is not uncommon to have differences between a\ncompany's SAMR and SEC filings.\" (Compl. 'l[ 117.) Courts in this district have found that in\nthese instances the plaintiff \"must allege at least some fact to support that (1) the SEC figures,\nand not the [other] filings, are false, and (2) any variation is not attributable to variations in\n\n\n                                                 13\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 14 of 19\n\n\n\nreporting rules or accounting standards.\" In re China Valves Tech. Sec. Litig., 2012 WL 4039852, at\n*6 (S.D.N.Y. Sept. 12, 2012).\n        Lead Plaintiff urges that the discrepancy between the Chinese and U.S. filings are not\ndue to differences in Chinese and U.S. accounting standards and claims that QTT \"does not\nappear to generate revenue outside of mainland China\" and \"le[ft] RMB 187.6 million (or 36%\nof the reported revenue) unaccounted for in 2017 and RMB 970.67million (or 32% of the\nreported revenue) unaccounted for in 2018, respectively.\" (Comp!. '![ 120.)\n        The claim that QTT \"does not appear to generate revenue outside of mainland China\" is\nnot a factual allegation. Because Lead Plaintiff alleges no facts to support a finding that the SEC\nfigures, rather than the SAMR figures, are false, and does not allege sufficiently that any\nvariation between the two is not simply attributable to conceded variations in accounting\nstandards, the Complaint fails to state with particularity circumstances constituting fraud and\nthereby fails to state a Section lO(b) claim grounded in this factual assertion.\n\n                                f) QTT' s Failure to Disclose Contingent Liabilities\n\n         The Complaint also alleges that QTT' s failure to disclose a loss contingency in its\nfinancial reports violated GAAP, and thus was an actionable omission. The Complaint notes\nthat GAAP defines a loss contingency as \"[ a]n existing condition, situation, or set of\ncircumstances involving uncertainty as to possible loss to an entity that will ultimately be\nresolved when one or more future events occur or fail to occur,\" Comp!.'![ 121 (citing ASC 450-\n20-20), and argues that \"[b]ecause there was 'at least a reasonable possibility' that fines and\npenalties may have [] incurred, GAAP required QTT to disclose the nature of the\naforementioned loss contingency and provide '[a]n estimate of the possible loss or range of loss\nor a statement that such an estimate cannot be made' in the notes to its financial statements.\"\nComp!.'![ 122 (citing 450-20-50-3-4).\n         However, the Complaint does not allege any actual government investigation that\nis likely to result in a material fine. Furthermore, the mere \"potential for investigation does not\ngive rise to a 'probability of impairment,' the standard the GAAP uses when determining\nwhether disclosure is necessary.\" Zaluski v. United Am. Healthcare Corp., 527 F.3d 564,577 (6th\nCir. 2008)).\n         Lead Plaintiff responds that the contingent liability was required to be disclosed because\n\"QTT was on notice that Chinese regulators were scrutinizing its misconduct.\" (Plaintiff's Opp.\nat 15 n.15.) However, regulatory scrutiny by itself does not automatically mandate that a subject\ncompany account for loss contingency in its financials (which could impliedly require it to\ndisclose uncharged wrongful conduct). See City of Pontiac Policemen's & Firemen's Ret. Sys. v.\nUBS AG, 752 F.3d 173, 184 (2d Cir. 2014) (under sections 11 and 12(a)(2) of the Securities Act,\n\"companies do not have a duty 'to disclose uncharged, unadjudicated wrongdoing\"').\n         Because the Complaint does not allege the existence of any government investigation\nwhatsoever that is likely to result in a material fine, the Complaint fails to state a Section lO(b)\nclaim grounded in this factual assertion.\n\n\n\n\n                                                 14\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 15 of 19\n\n\n\n\n        In sum, Lead Plaintiff's Complaint fails to allege a single misstatement or omission of\nmaterial fact that could give rise to a Section 10(b) claim. Count I is therefore dismissed in its\nentirety.\n\n              b.   Count II: Section 20(a) Claims Under the 1934 Exchange Act\n\n        Section 20(a) of the Securities Exchange Act creates a cause of action against defendants\nalleged to have been \"control persons\" of those engaged in the primary securities fraud. That\nsection provides that:\n        Every person who, directly or indirectly, controls any person liable under any\n        provision of this chapter or of any rule or regulation thereunder shall also be\n        liable jointly and severally with and to the same extent as such controlled person\n        to any person to whom such controlled person is liable, unless the controlling\n        person acted in good faith and did not directly or indirectly induce the act or acts\n        constituting the violation or cause of action.\n15 U.S.C. \u00a7 78t(a).\n        \"To state a claim of control person liability under section 20(a), 'a plaintiff must show (1)\na primary violation by the controlled person, (2) control of the primary violator by the\ndefendant, and (3) that the defendant was, in some meaningful sense, a culpable participant in\nthe controlled person's fraud.\"' Carpenters Pension Tr. Fund of St. Louis v. Barclays PLC, 750 F.3d\n227, 236 (2d Cir. 2014) (quoting ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108 (2d Cir.\n2007)).\n        Because the Court has found that the Complaint did not adequately allege an actionable\nprimary violation of Section 10(b), Count II must be dismissed.\n\n         B. 1933 Securities Act Claims\n\n        Lead Plaintiff also asserts strict liability claims under sections 11, 12( a)(2), and 15 of the\n1933 Securities Act against the 1933 Securities Act Defendants (Comp!. 'I[ 314) arising out of\nQTT' s IPO and SPO (Comp!. '['I[ 315-17). Lead Plaintiff alleges that the IPO documents\n\"contained multiple material misstatements regarding the Company's strategy of targeting\nusers in lower tier cities in China\" (id. 'I[ 321), \"omitted material facts necessary to make the\nstatements made therein not misleading\" (id. 'I[ 322), failed to disclose related party transaction\ninformation \"involving the Mengtui App, Fangce and the Shihui Miao App based on Tan's\nownership stakes in Taiyun Capital, and Bige\" and \"Dianguan Acquisition ... based on Liang' s\nspecial relationship with Tan through companies in which Tan is a majority investor or owner,\nincluding Woofoo Equity and Taiyun Cap\" (id. 'I[ 336), and made \"untrue statements of material\nfacts and omitted material facts necessary\" related to net revenue data and reasons for replacing\nthe Company's third-party advertising agent, Baidu, with Dianguan (id. 'I[ 339-340). Lead\nPlaintiff makes nearly identical allegations relating to the SPO Documents.\n        Sections 11, 12, and 15 of the Securities Act \"impose liability on certain participants in a\nregistered security offering when the publicly filed documents used during the offering contain\nmaterial misstatements or omissions.\" In re Morgan Stanley Info. Fund Sec. Litig., 592 F.3d 347,\n358 (2d Cir. 2010). Section 11 applies to \"registration statement[s],\" Section 12 covers any\n\n\n                                                  15\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 16 of 19\n\n\n\n\"prospectus or oral communication,\" and Section 15 imposes liability on individuals or entities\nthat \"control[] any person liable\" under Sections 11 or 12. 15 U.S.C. \u00a7 77k(a), l (a)(2), o. Liability\npursuant to Section 15 thus requires, as a prelimmary matter, a demonstration of liability under\neither Section 11 or Section 12. In re Morgan Stanlei; Info. Fund, 592 F.3d at 358.\n\n         1.    Standard of Review\n\n          In considering Section 11 and Section 12(a)(2) claims under the 1933 Securities Act,\nthe Court must \"'conduct a prelimmary inquiry into whether plaintiffs' allegations are\npremised on fraud,' or merely on negligence, to determine the appropriate pleading standard.\"\nCity of Pontiac Policemen's & Firemen's Ret. Sys. v. UBS AG, 752 F.3d 173, 183 (2d Cir. 2014)\n(quoting Hutchison v. Deutsche Bank Sec. Inc., 647 F.3d 479, 484 (2d Cir. 2011)).\n          Courts have offered varying guidance on a plaintiff's burden to differentiate a Section 11\nSecurities Act claim based in negligence from a fraud-based 1934 Exchange Act claim. The\nSecond Circuit in Rombach v. Chang noted that a complaint's statement that a claim does not\nsound in fraud and therefore is not subject to the requirements of Rule 9(b) is simply not\nsufficient. 355 F.3d 164, 172 (2d Cir. 2004) (citing In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1405\n(9th Cir. 1996) (\"[Plaintiff] argues that it specifically disclaimed any allegations of fraud with\nrespect to its Section 11 claims. These nominal efforts are unconvincing where the gravamen of\nthe complaint is plainly fraud and no effort is made to show any other basis for the claims\nlevied at the Prospectus.\")). A complaint's articulation of the basis for a negligence claim would\nhelp to differentiate a 1933 Securities Act claim from the 1934 Exchange Act claim. See In re\nRefco, Inc. Sec. Litig., 503 F. Supp. 2d 611, 633 (S.D.N.Y. 2007); and In re Ultrafem Inc. Sec. Litig., 91\nF. Supp. 2d 678, 691 (S.D.N.Y. 2000). Compartmentalizing the fraud and non-fraud claims can\nalso be a factor in distinguishing a 1933 Securities Act claim from any fraud-based claims. In re\nJumei Int'l Holding Ltd. Sec. Litig., No. 14CV9826, 2017 WL 95176, at *3 (S.D.N.Y. Jan. 10, 2017)\n(\"Plaintiffs have sufficiently compartmentalized the claims into two discrete theories-\nnegligence under the Securities Act, and fraud under the Exchange Act, with specified factual\nallegations supporting each .... Accordingly, the notice-pleading standard of Rule 8 applies to\nPlaintiffs' Securities Act claims.\").\n          Here the Complaint attempts to differentiate the 1934 Exchange Act fraud claims from\nthe 1933 Securities Act claims and disclaims a theory of fraud for its 1933 Securities Act claims\n(\"Lead Plaintiff expressly disclaims any reference or reliance upon fraud allegations for such\nclaims and these claims are entirely separate and distinct from the 1934 Act Claims.\"). (Comp!.\n'l[ 314.) The Court recognizes that although the Complaint's 1933 Securities Act arguments\n(Comp!. \u00a7 XI) center on statements that the Complaint had earlier alleged were made\nfraudulently (Comp!. \u00a7 VII), plaintiffs can use the same factual circumstances to plead Section 11\nand Section 10(b) claims in the alternative. See In re IAC/InterActiveCorp Sec. Litig., 695 F. Supp.\n2d 109, 116 (S.D.N.Y. 2010).\n          However, the Complaint's 1933 Securities Act arguments manifestly sound in fraud and\nthereby trigger the heightened Rule 9(b) pleading standard. City of Pontiac Policemen's &\nFiremen's Ret. Sys. v. UBS AG, 752 F.3d 173, 183 (2d Cir. 2014). And the Complaint's ilisclaimer\nof fraud cannot by itself avoid the requirements of Rule 9(b). See In re JP Morgan Chase Sec. Litig.,\n\n\n\n                                                   16\n\f        Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 17 of 19\n\n\n\n\n363 F. Supp. 2d at 635.); see also In re Alcatel Sec. Litig., 382 F. Supp. 2d 513,530 (S.D.N.Y. 2005).\nThe language used throughout the 1933 Securities Act section of the Complaint in many\ninstances mirrors exactly the language used throughout the section on the 1934 Exchange Act\nclaims.\n        In an early section of the Complaint labeled \"Defendant's Illegal Acts,\" which comes\nbefore any breakdown between the 1934 Exchange Act claims and 1933 Securities Act claims,\nLead Plaintiff refers to the \"fraud set forth in the Company's Offering Documents\" and claims\nthat \"[c]entral to QTT's strategy of rapidly growing its revenues was the intentional placement\nof non-conforming, and, in many cases, illegal advertisements on its mobile applications.\"\n(Compl. 1[1[ 66, 79.) The Complaint alleges that QTT's IPO and SPO statements on revenue\n\"contained multiple material misstatements regarding the Company's strategtJ of targeting users\nin lower tier cities in China\" and \"contained untrue statements of material facts and omitted\nmaterial facts necessary to make the statements made therein not misleading by ... [not]\ndisclosing that the Company was seeking to avoid the oversight Baidu had been providing\nwhich had prevented non-compliant ads from running; ... and [] describing the Company's\n'performance obligation' to its end advertiser customers without disclosing that it set up\nseparate teams with different processes and procedures for qualified versus unqualified\nadvertisers in order to sell non-compliant and illegal ads.\" (Compl. 1[1[ 321, 324, 339, 340.)\n        The Complaint uses a similar \"avoid the oversight\" assertion for the IPO's and SPO's\ndisclosures of risk (id. 1[1[ 333-34, 344-45). It alleges that\" different processes and procedures\nwere being applied to advertising content such that any declined ads could be manually\nallowed on the QTT app.\" (Compl. 1[ 329.) These claims simply do not sound in negligence.\nThus, \"[n]otwithstanding the Plaintiffs' fraud disclaimer, the Section 11 claims in this case are\npeppered with\" language \"classically associated with fraud.\" In re Elan Corp., No.\n02CIV.865(RMB)(FM), 2004 WL 1305845, at *7 (S.D.N.Y. May 18, 2004).\n        Because the Complaint's 1933 Securities Act claims sound in fraud, they are subject to\nthe Rule 9(b) heightened pleading standards.\n\n              a.   Count III: Section 11 Claims\n\n                   i.   Standing\n\n       QTT Defendants argue that Lead Plaintiff \"lacks standing to bring a Section 11 claim\nwith regard to the SPO.... [because] he cannot trace his shares to the SPO\" and that he \"lacks\nstanding to assert the Section 12(a)(2) claim, for either himself or the putative class\" because\nLead Plaintiff had not \"purchased the security directly from the defendants through the public\noffering at issue.\" (QTT Mot., at 23-24.) This argument is unpersuasive.\n       The Complaint states that Lead Plaintiff did not buy ADSs in the IPO or SPO directly\nfrom defendants, but that \"his own personal claims mean that he 'possess[ es] the same interest\nand suffered the same injury' as those class members who bought directly from Defendants\"\nand that Lead Plaintiff \"has 'the same necessary stake in litigating' the falsity of Defendants\nstatements, and this therefore' gives the named plaintiff a sufficient stake in the outcome of her\nputative class members' cases' to assert these claims.\" (Compl. n.79) (citing Langan v. Johnson &\nJohnson Consumer Companies, Inc., 897 F.3d 88, 94 (2d Cir. 2018)).\n\n\n                                                   17\n\f       Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 18 of 19\n\n\n\n        Lead Plaintiff persuasively contends that \"Langan demonstrates that Mr. Pappas-who\nclearly has standing to bring Exchange Act claims, as well as\u00a7 11 claims as to the IPO-also has\nstanding to bring the remaining Securities Act claims involving substantially the same\nmaterially false and misleading statements\" (Plaintiff's Opp. at 43.) Lead Plaintiff argues that (i)\n\"Plaintiff has alleged an injury caused by Defendants, as their conduct caused monetary losses\ncapable of redress under\u00a7\u00a7 lO(b) and 20(a) of the Exchange Act and\u00a7\u00a7 11 and 15 of the\nSecurities Act (as to the IPO)\" (Plaintiff's Opp. at 43); (ii) \"the alleged injury is of the same\ngeneral character as the injuries Defendants caused under\u00a7 12(a)(l) (as to the IPO and SPO) and\n\u00a7 11 (as to the SPO)\" because \"Plaintiff and the absent class members suffered monetary losses\nin connection with substantially similar false and misleading statements and omissions in\nDefendants' Offering Documents\" (Plaintiff's Opp. at 43); and (iii) \"Plaintiff and the absent class\nmembers have the same necessary stake to litigate those issues against Defendants [and]\nPlaintiff intends to prove that Defendants' statements were false and misleading and to recover\non behalf of himself and the Class\" (citing Comp!. 'l['l[ 310-12).\n\n                  ii.   Analysis\n\n         Section 11 prohibits materially false or misleading statements or omissions in\nregistration statements, and requires a plaintiff to show (1) that it purchased a registered\nsecurity, (2) the defendant participated in the offering in a manner sufficient to give rise to\nliability under Section 11, and (3) the registration statement \"contained an untrue statement of a\nmaterial fact or omitted to state a material fact required to be stated therein or necessary to\nmake the statements therein not misleading.\" 15 U.S.C. \u00a7 77.k(a); In re Morgan Stanley Info. Fund,\n592 F.3d at 358-59; In re Initial Public Offerings Sec. Litig., 471 F.3d 24, 43 (2d Cir. 2006).\n         '\"Issuers are subject to virtually absolute liability under section 11,' and plaintiffs\nalleging violations of Sections 11 and 12(a)(2) not need plead 'scienter, reliance, or loss\ncausation.\"' Hutchison v. Deutsche Bank Sec. Inc., 647 F.3d 479,484 (2d Cir. 2011) (quoting In re\nMorgan Stanier; Info. Fund Sec. Litig., 592 F.3d 347,359 (2d Cir. 2010)). Non-issuer \"potential\ndefendants under sections 11 and 12(a)(2) may be held liable for mere negligence.\" In re Morgan\nStanley Info. Fund Sec. Litig., 592 F.3d at 359.\n         The definition of \"materiality\" for a Section 11 claim is identical to the definition for a\nSection lO(b) claim under the 1934 Exchange Act. See In re Morgan StanletJ Info. Fund Sec. Litig.,\n592 F.3d 347 at 360.\n         As explained above, Lead Plaintiff's 1933 Securities Act claims under Section 11 sound\nin fraud as to QTI, the Director Defendants, and the UW Defendants and therefore are subject\nto the heightened pleading standard of Rule 9(b) and the PSLRA. Perhaps because the\nComplaint expressly disclaims that \"liability under this Count arises from any scienter or\nfraudulent intent\" (Comp!. 'l[ 373), it fails to plead facts with particularity as to each defendant.\n(Comp!. \u00a7 XI.) Accordingly, Lead Plaintiff's Section 11 claims under the 1933 Securities Act\ncannot survive QTI Defendants' motion to dismiss.\n\n\n\n\n                                                 18\n\f         Case 1:20-cv-07717-SHS Document 26 Filed 08/03/23 Page 19 of 19\n\n\n\n\n              b.    Count W: Section 12(a)(2) Claim\n\n        Sections 11 and 12(a)(2) are \"Securities Act siblings\" with \"roughly parallel elements.\" In\nre Morgan Stanley Tnfo. Fund, 592 F.3d at 359. Section 12(a)(2) prohibits materially untrue or\nmisleading statements or omissions in any prospectus or oral commwlication used to solicit the\nsale of a registered secmity and requires a plaintiff to establish that (1) the defendant is a\n\"seller\" as defined by Section 12, (2) the sale was effectuated \"by means of a prospectus or oral\ncommunication,\" and (3) the prospectus or oral communication \"include[ d) an untrue\nstatement of material fact or omit[ted] to state a material fact necessary in order to make the\nstatements, in the light of the circumstances tmder which they were made, not misleading.\" 15\nU.S.C. \u00a7 771 (a)(2); In re Morgan StanleiJ Info. Fund, 592 F.3d at 359.\n         Lead Plaintiff's claim alleging Section 12(a)(2) violations under the 1933 Secmities Act\nmust be dismissed for the same reasons set forth above regarding the Section 11 claims. This\nclaim also concerns QTI's offering documents and sounds in fraud, but fails to plead facts with\nparticularity as to each defendant. (Compl. \u00a7 XI.) Accordingly, Lead Plaintiffs Section 12(a)(2}\nclaims under the 1933 Securities Act must be dismissed.\n\n              c.     Count V: Section 15 Claim\n\n         In order to establish a prima facie case of controlling-person liability a plaintiff \"must\nshow a primary violation by the controlled person.\" SEC v. First JersetJ Secs., Inc., 101 F.3d 1450,\n1472-73 (2d Cir. 1996). \"Section 15 requires only that a plaintiff plead that the relevant\ndefendant controlled the primary violator, and control for purposes of Section 15 entails only\n\"the power to direct or cause the direction of the management and policies of a person, whether\nthrough the ownership of voting securities, by contract, or otherwise.\" In re CitiGroup Inc. Bond\nLitig., 723 F. Supp. 2d 568, 595 (S.DN.Y. 2010) (quoting SEC v. First Jersey Sec., Inc., 101 F.3d\n1450, 1472-73 (2d Cir. 1996)).\n         Because Lead Plaintiff's Section 11 and Section 12(a)(2) claims for primary liability under\nthe 1933 Securities Act fail, the Section 15 control p erson claims must be dismissed. See In re\nMorgan Stanlei; Info. Fund Sec. Litig., 592 F.3d 347, 358 (2d Cir. 2010); SEC v. First Jetsey Secs., Inc.,\n101 F.3d 1450 at 1472-73. (\"In order to establish a prima fade case of controlling-person liability,\na plaintiff must show a primary violation by the controlled person.\").\n\nIll. CONCLUSION\n     For the reasons set forth above, defendants' .motions to dismiss the Consolidated\nAmended Class Action Complaint are granted in full.\n\nDated:    New York, New York\n          August 3, 2023                         SO ORDERED:\n\n\n\n\n                                                    19\n\f","ocr_status":2,"date_upload":"2023-08-04T02:33:25.767700-07:00","document_number":"26","attachment_number":null,"pacer_doc_id":"127033817386","is_available":true,"is_free_on_pacer":true,"is_sealed":null,"document_type":1,"description":"Memorandum & Opinion","acms_document_guid":""}],"date_created":"2023-08-03T16:59:54.008949-07:00","date_modified":"2023-08-08T02:41:29.912257-07:00","date_filed":"2023-08-03","time_filed":"12:00:38","entry_number":26,"recap_sequence_number":"2023-08-03.001","pacer_sequence_number":99,"description":" OPINION AND ORDER  For the reasons set forth above, defendants' motions to  dismiss the Consolidated Amended Class Action Complaint are granted in full. (And as further set forth herein.) SO ORDERED.   (Signed by Judge Sidney H. Stein on 8/3/2023)   (jca)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/360627880/","id":360627880,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/367242623/","id":367242623,"tags":[],"absolute_url":"","date_created":"2023-08-03T16:59:53.883895-07:00","date_modified":"2023-08-04T13:34:32.524415-07:00","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":"Transmission to Orders and Judgments Clerk","acms_document_guid":""}],"date_created":"2023-08-03T16:59:53.879144-07:00","date_modified":"2023-08-04T13:34:32.513512-07:00","date_filed":"2023-08-03","time_filed":"12:01:26","entry_number":null,"recap_sequence_number":"2023-08-03.001","pacer_sequence_number":null,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/360627483/","id":360627483,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/367242226/","id":367242226,"tags":[],"absolute_url":"/docket/18453599/27/brown-v-qutoutiao-inc/","date_created":"2023-08-03T16:59:37.641186-07:00","date_modified":"2025-12-25T11:45:39.260190-08:00","sha1":"75b0b286204ad4ef8dc4f75e196917fe62bb3137","page_count":1,"file_size":160451,"filepath_local":"recap/gov.uscourts.nysd.544615/gov.uscourts.nysd.544615.27.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.544615/gov.uscourts.nysd.544615.27.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"        Case 1:20-cv-07717-SHS                Document 27              Filed 08/03/23   Page 1 of 1\n\n\n\n\nUNITED STATES DISTRICT COURT\nSOUTHERN DISTRICT OF NEW YORK\n-------------------------------------------------------------------X\n\n\nIn re QUTOUTIAO, INC. SECURITIES                                              20 CIVIL 6707 (SHS)\nLITIGATION                                                                    20 CIVIL 7717 (SHS)\n\n                                                                                 JUDGMENT\n-------------------------------------------------------------------X\n\n\n\n        It is hereby ORDERED, ADJUDGED AND DECREED: That for the reasons\n\nstated in the Court's Opinion & Order dated August 3, 2023, defendants' motions to dismiss the\n\nConsolidated Amended Class Action Complaint are granted in full. (And as further set forth\n\nherein). Accordingly, the cases are closed.\n\nDated: New York, New York\n\n          August 3, 2023\n\n\n                                                                           RUBY J. KRAJICK\n                                                                             Clerk of Court\n\n\n\n                                                              BY:\n                                                                       _________________________\n                                                                             Deputy Clerk\n\f","ocr_status":2,"date_upload":"2025-12-24T15:17:50.603580-08:00","document_number":"27","attachment_number":null,"pacer_doc_id":"127033818020","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Judgment - Clerk","acms_document_guid":""}],"date_created":"2023-08-03T16:59:37.629937-07:00","date_modified":"2023-08-04T13:34:16.019095-07:00","date_filed":"2023-08-03","time_filed":"12:53:44","entry_number":27,"recap_sequence_number":"2023-08-03.001","pacer_sequence_number":106,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/359473065/","id":359473065,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/366064115/","id":366064115,"tags":[],"absolute_url":"/docket/18453599/25/brown-v-qutoutiao-inc/","date_created":"2023-07-21T14:13:17.767543-07:00","date_modified":"2023-07-22T12:07:24.001732-07:00","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":"25","attachment_number":null,"pacer_doc_id":"127033743226","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Memo Endorsement AND ~Util - Add and Terminate Attorneys","acms_document_guid":""}],"date_created":"2023-07-21T14:13:17.758735-07:00","date_modified":"2023-07-22T12:07:23.994963-07:00","date_filed":"2023-07-21","time_filed":"16:35:55","entry_number":25,"recap_sequence_number":"2023-07-21.001","pacer_sequence_number":96,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/359207108/","id":359207108,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/365794276/","id":365794276,"tags":[],"absolute_url":"/docket/18453599/24/brown-v-qutoutiao-inc/","date_created":"2023-07-19T12:10:11.338713-07:00","date_modified":"2023-07-24T12:23:34.845463-07:00","sha1":"3d9576d9c1d8132dba243fefe775fb0e87345e59","page_count":1,"file_size":79628,"filepath_local":"recap/gov.uscourts.nysd.544615/gov.uscourts.nysd.544615.24.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.544615/gov.uscourts.nysd.544615.24.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"                    Case 1:20-cv-07717-SHS Document 24 Filed 07/19/23 Page 1 of 1\n\n\n\n\n                                      UNITED STATES DISTRICT COURT\n                                     SOUTHERN DISTRICT OF NEW YORK\n\n\n\n\n           In re QUTOUTIAO, INC. SECURITIES                 Master File No .: 1:20-cv-06707 (SHS)\n           LITIGATION\n\n                                                                       ORDER\n           This Document Relates To :\n\n           ALL ACTIONS.\n\n\n\n                                  NOTICE OF WITHDRAWAL OF COUNSEL\n\n\n                    TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:\n\n                    PLEASE TAKE NOTICE that Constantine P. Economides, Esq . hereby notifies the Court\n\n         and all parties that he is no longer with the firm Freedman Normand Friedland LLP and involved\n\n         in this matter and is therefore withdrawing as counsel of record .\n\n                    NOTICE IS FURTHER GIVEN THAT no further papers, pleadings, motions,\n\n         correspondence, communications, regarding the above-caption action, should be served on\n\n         Constantine P. Economides. All future CM/ECF notifications should remain directed towards the\n\n         attorneys of record for Lead Plaintiff James Pappas.\n\n\n         Dated : July 18, 2023                         Respectfully Submitted,\n\n                                                       Isl Constantine P. Economides\nThe Clerk of Court shall terminate Mr.                 Constantine P. Economides\nEconomides' appearance in this matter.                 Dynamis LLP\n                                                       1111 Brickell Ave. , 10th Floor\nDated:New York, New York                               Miami, FL 33131\n      July 18, 2023                                    (t) (305) 985-2959\n                                                       (@) ceconomides@dynamis llp.com\nSO ORDERED:\n               ,/\n\n\n\n       J\u00b7, '\u00b7'),\n      Sidney\n\f","ocr_status":2,"date_upload":"2023-07-20T01:34:41.295796-07:00","document_number":"24","attachment_number":null,"pacer_doc_id":"127033723354","is_available":true,"is_free_on_pacer":true,"is_sealed":null,"document_type":1,"description":"Order AND ~Util - Add and Terminate Attorneys","acms_document_guid":""}],"date_created":"2023-07-19T12:10:11.331304-07:00","date_modified":"2023-07-24T12:23:34.838339-07:00","date_filed":"2023-07-19","time_filed":"13:20:56","entry_number":24,"recap_sequence_number":"2023-07-19.001","pacer_sequence_number":93,"description":" ORDER AND NOTICE OF WITHDRAWAL OF COUNSEL: PLEASE TAKE NOTICE that Constantine P. Economides, Esq. hereby notifies the Court and all parties that he is no longer with the firm Freedman Normand Friedland LLP and involved in this matter and is therefore withdrawing as counsel of record. As further set forth by this Order. The Clerk of Court shall terminate Mr. Economides' appearance in this matter. SO ORDERED.   (Signed by Judge Sidney H. Stein on 7/18/2023)   (tg)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/358391390/","id":358391390,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/364942221/","id":364942221,"tags":[],"absolute_url":"/docket/18453599/22/brown-v-qutoutiao-inc/","date_created":"2023-07-10T16:11:28.544238-07:00","date_modified":"2023-07-10T16:11:28.545613-07:00","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":"22","attachment_number":null,"pacer_doc_id":"127033669298","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Transcript","acms_document_guid":""}],"date_created":"2023-07-10T16:11:28.540111-07:00","date_modified":"2023-07-10T16:11:28.541519-07:00","date_filed":"2023-07-10","time_filed":"17:51:24","entry_number":22,"recap_sequence_number":"2023-07-10.001","pacer_sequence_number":89,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/358391335/","id":358391335,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/18453599/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/364942166/","id":364942166,"tags":[],"absolute_url":"/docket/18453599/23/brown-v-qutoutiao-inc/","date_created":"2023-07-10T16:11:26.902564-07:00","date_modified":"2023-07-10T16:11:26.904081-07:00","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":"23","attachment_number":null,"pacer_doc_id":"127033669425","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Notice 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