In Re Snap Inc. Securities LitigationRESPONSEC.D. Cal.February 27, 2019 GUPTA’S RESPONSE TO NEW MEXICO’S SUPPLEMENTAL FILINGS 2:17-cv-03679-SVW-AGR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Benjamin Heikali SBN 307466 Email: bheikali@faruqilaw.com FARUQI & FARUQI, LLP 10866 Wilshire Boulevard, Suite 1470 Los Angeles, CA 90024 Telephone: 424-256-2884 Facsimile: 424-256-2885 Richard W. Gonnello (admitted pro hac vice, Case No. 2:17-cv-05054-SVW-AGR) Email: rgonnello@faruqilaw.com Katherine M. Lenahan (admitted pro hac vice) Email: klenahan@faruqilaw.com Sherief Morsy (admitted pro hac vice, Case No. 2:17-cv-05054-SVW-AGR) Email: smorsy@faruqilaw.com FARUQI & FARUQI, LLP 685 Third Avenue, 26th Floor New York, NY 10017 Telephone: 212-983-9330 Facsimile: 212-983-9331 Attorneys for Proposed Lead Plaintiff Shinu Gupta UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA IN RE SNAP INC. SECURITIES LITIGATION No. 2:17-cv-03679-SVW-AGR SHINU GUPTA’S RESPONSE TO THE SUPPLEMENTAL FILINGS OF THE STATE OF NEW MEXICO ON BEHALF OF THE NEW MEXICO STATE INVESTMENT COUNCIL CLASS ACTION Judge: Hon. Stephen V. Wilson Hearing Date: March 4, 2019 Time: 1:30 p.m. Courtroom: 10A, 10th Floor Case 2:17-cv-03679-SVW-AGR Document 253 Filed 02/27/19 Page 1 of 5 Page ID #:5295 1 GUPTA’S RESPONSE TO NEW MEXICO’S SUPPLEMENTAL FILINGS 2:17-cv-03679-SVW-AGR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Shinu Gupta (“Gupta”) respectfully submits this response to the supplemental filings submitted by lead plaintiff movant the State of New Mexico (the “State”) on behalf of the New Mexico State Investment Council (“NMSIC”) on February 21, 2019.1 The supplemental filings consisted of a notice (ECF No. 248) and the Declaration of Tania Maestas, the Chief Deputy Attorney General of the State of New Mexico (ECF No. 248-1) (“Supplemental Declaration” or “Supp. Decl.”). These untimely supplemental filings underscore the State’s inadequacy to serve as lead plaintiff. As an initial matter, the State’s supplemental filings are untimely under Local Rule 7-10, which required “reply memorand[a], and declarations or other rebuttal evidence[,]” to be filed by February 15, 2019. See ECF No. 249 at 1. They are also untimely and should be disregarded by the Court because this information could and should have been filed with the State’s original lead plaintiff motion, but was not. See Schriver v. Impac Mortg. Holdings, Inc., 2006 WL 6886020, at *9 n.10 (C.D. Cal. May 2, 2006) (rejecting movant’s attempt to submit supplemental evidence that could have been submitted with its initial motion); cf. In re NYSE Specialists Sec. Litig., 240 F.R.D. 128, 138-39 (S.D.N.Y. 2007) (rejecting supplementation of losses where movant failed to explain why they were not included in the original motion). Even if the Court were to consider the supplemental filings, they only further expose the deficiencies in the State’s motion. The State now attempts to claim that NMSIC is pursuing this litigation in some capacity. See Supp. Decl. at ¶8. Either NMSIC is seeking to be appointed lead plaintiff in some capacity, or the State is, but the motion fails either way. As Gupta previously noted, NMSIC lacks standing to sue in its own name for claims based upon losses suffered by the funds it manages. ECF No. 242 at 22-24. Obviously, Gupta was correct; otherwise there was no need for the State to have 1 All internal citations and quotations are omitted and all emphases are added. Case 2:17-cv-03679-SVW-AGR Document 253 Filed 02/27/19 Page 2 of 5 Page ID #:5296 2 GUPTA’S RESPONSE TO NEW MEXICO’S SUPPLEMENTAL FILINGS 2:17-cv-03679-SVW-AGR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 moved for lead plaintiff on NMSIC’s behalf. Indeed, the Supplemental Declaration concedes that the investments at issue are not owned by the NMSIC, but by the State. See Supp. Decl. at ¶3 (“The funds controlled and managed by [NMSIC] are sovereign wealth funds belonging to the State of New Mexico.”). Therefore, NMSIC has no property interest in the investments and no Article III standing to pursue this litigation, let alone to serve as lead plaintiff. See ECF No. 242 at 22-24.2 That said, the fact that the State—the owner of the investments—filed the lead plaintiff motion does not save the motion because the State did not file the certification required by the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. §78u-4(a)(2)(A). As Gupta previously noted, the certification filed with the State’s motion was filed by NMSIC, not the State. See ECF No. 242 at 21-22 (citing ECF No. 217-1 at 2 (PSLRA certification signed by the State Investment Officer, a NMSIC appointee, “on behalf of [NMSIC]”)). Thus, there is no way to tell whether the State has met the criteria that Congress requires a movant to satisfy in order to be entitled to invoke the “most adequate plaintiff” presumption. See 15 U.S.C. §78u-4(a)(3)(B). For example, the PSLRA requires that certifications “set[] forth all of the transactions of the plaintiff in the security that is the subject of the complaint during the class period specified in the complaint[.]” 15 U.S.C. §78u- 4(a)(2)(A)(iv). The certification filed on behalf of NMSIC, however, only sets forth “NMSIC’s transactions in Snap securities during the Class Period[.]” ECF No. 217- 1 at 2 ¶4. It is therefore impossible to tell whether the State or any other State entities have investments in Snap that are not reflected in the certification, and correspondingly impossible to calculate the State’s losses. Irving Firemen’s Relief & 2 The State’s belated attempts to claim that the litigation is actually being pursued by NMSIC in its capacity as a trustee and “as an arm of the State[,]” (ECF No. 244 (State’s Reply) at 8-10, Supp. Decl. at ¶8) must fail, as the motion and the lead plaintiff certification filed with it “make no mention of appointing [NMSIC]” in either capacity. See Weisz v. Calpine Corp., 2002 WL 32818827, at *7 (N.D. Cal. Aug. 19, 2002) (declining to consider losses incurred by trusts for which the lead plaintiff movant serves as the trustee where the movant sought appointment as lead plaintiff “in his individual capacity”). Case 2:17-cv-03679-SVW-AGR Document 253 Filed 02/27/19 Page 3 of 5 Page ID #:5297 3 GUPTA’S RESPONSE TO NEW MEXICO’S SUPPLEMENTAL FILINGS 2:17-cv-03679-SVW-AGR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Ret. Fund v. Tesco PLC, 2015 WL 1345931, at *3 (S.D.N.Y. Mar. 19, 2015) (a movant’s adequacy is undermined if “the Court is unable to verify its claimed losses”). Assuming arguendo that the State’s only relevant transactions are those listed in the NMSIC certification and loss chart filed with the State’s motion, the supplemental filings suggest that multiple entities’ trades may be included therein. See Supp. Decl. at ¶¶3, 8 (describing the litigation as being pursued on behalf of the “sovereign wealth funds[,]” of which there are four3). If multiple entities’ trades are included but not broken out on a fund-by-fund basis (see ECF No. 249 at 3-4), it is impossible for the Court and competing movants to analyze the State’s trading pattern. For example, there is no way to tell whether any of the entities whose trades are listed on the PSLRA certification made the same type of post-disclosure purchases that the State argues render Gupta atypical, let alone whether that particular entity is subject to any other unique defenses. See, e.g., Perlmutter v. Intuitive Surgical, Inc., 2011 WL 566814, at *8-9 (N.D. Cal. Feb. 15, 2011) (declining to appoint as lead plaintiff a movant who was a “net seller” and “net gainer” because he potentially benefited from the alleged fraud and may therefore be subject to unique defenses and therefore atypical). Without having timely filed the requisite certification setting forth all of the State’s trades in Snap during the Class Period broken out on a fund-by-fund basis, the State is not entitled to the lead plaintiff presumption. And it is too late for the State to cure any deficiencies now. See Darwin v. Taylor, 2012 WL 5250400, at *5 (D. Colo. Oct. 23, 2012) (rejecting corrected PSLRA certification because, inter alia, it was submitted “after the PSLRA’s 60-day deadline expired”). 3 The “sovereign wealth funds” consist of four “permanent funds”: the Land Grant Permanent Fund, the Severance Tax Permanent Fund, the Tobacco Settlement Permanent Fund, and the Water Trust Fund. See NMSIC 60th Anniversary Report, at 2, 6 (PDF pagination), NMSIC (2018), http://www.sic.state.nm.us/uploads/FileLinks/ 5344f5ea807f40d7a58c0498891a649a/NMSIC_60thAnniversaryReport_2018.pdf (“New Mexico’s permanent funds also are Sovereign Wealth Funds”). Case 2:17-cv-03679-SVW-AGR Document 253 Filed 02/27/19 Page 4 of 5 Page ID #:5298 4 GUPTA’S RESPONSE TO NEW MEXICO’S SUPPLEMENTAL FILINGS 2:17-cv-03679-SVW-AGR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Accordingly, the supplemental filings serve only to highlight the inadequacies that Gupta and other movants have noted about the State’s lead plaintiff motion. Dated: February 27, 2019 Respectfully submitted, By: /s/ Richard W. Gonnello Richard W. Gonnello FARUQI & FARUQI, LLP Benjamin Heikali SBN 307466 10866 Wilshire Boulevard, Suite 1470 Los Angeles, CA 90024 Telephone: 424-256-2884 Facsimile: 424-256-2885 Email: bheikali@faruqilaw.com Richard W. Gonnello (pro hac vice, Case No. 2:17-cv-05054-SVW-AGR) Katherine M. Lenahan (admitted pro hac vice) Sherief Morsy (pro hac vice, Case No. 2:17-cv-05054-SVW-AGR) FARUQI & FARUQI, LLP 685 Third Avenue, 26th Floor New York, NY 10017 Telephone: 212-983-9330 Facsimile: 212-983-9331 E-mail: rgonnello@faruqilaw.com klenahan@faruqilaw.com smorsy@faruqilaw.com Attorneys for Proposed Lead Plaintiff Shinu Gupta Case 2:17-cv-03679-SVW-AGR Document 253 Filed 02/27/19 Page 5 of 5 Page ID #:5299