SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO. Plaintiffs, Defendants.

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1 RAOUL D. KENNEDY (SB #0) raoul.kennedy@skadden.com SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP University Avenue, Suite 100 Palo Alto, California 01 Telephone: (0) 0-00 Facsimile: (0) 0-0 SETH M. SCHWARTZ (pro hac vice) seth.schwartz@skadden.com JEREMY A. BERMAN (pro hac vice) jeremy.berman@skadden.com SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Times Square New York, NY 0 Telephone: (1) -000 Facsimile: (1) - EBEN P. COLBY (pro hac vice) eben.colby@skadden.com SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 00 Boylston Street Boston, Massachusetts 0 Telephone: (1) -00 Facsimile: (1) - Attorneys for Defendants ishares Trust, BlackRock, Inc., BlackRock Fund Advisors, BlackRock Investments, LLC, Manish Mehta, Mark Wiedman, Robert S. Kapito and Jack Gee SUPERIOR COURT OF THE STATE OF CALIFORNIA GARTH JENSEN, PHILIP STEELE, SETH HARDY, RAY MOYLAN, KENNETH POWAGA, CYNTHIA POWAGA, ROGER FOSTER and ROBERT KACHELEK, INDIVIDUALLY and ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, v. ishares TRUST, et al., FOR THE COUNTY OF SAN FRANCISCO Plaintiffs, Defendants. CASE NO.: CGC 1- DEFENDANTS REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN FURTHER SUPPORT OF JUDGMENT ON THE PLEADINGS DISMISSING FIRST AMENDED COMPLAINT Date: April, 01 Time: :0 am Dept.: 0 Action Filed: June 1, 01 DISMISSING FIRST AMENDED COMPLAINT CGC 1-

2 TABLE OF CONTENTS ARGUMENT... 1 I. PLAINTIFFS CLAIMS ARE TIME-BARRED... 1 A. Merck Provides Additional Support for Dismissal... 1 B. Storm Warnings First Appeared Years Before Commencement of this Lawsuit... C. The Storm Warnings Were Not Concealed... D. The Storm Warnings Covered the Claims in the FAC... E. Plaintiffs Efforts to Distinguish Defendants Authorities Are Unavailing... II. PLAINTIFFS LACK STANDING TO SUE... A. Section Rule 1 is Irrelevant.... There is No Automatic Tracing... B. Section 1(a)()... CONCLUSION i DISMISSING FIRST AMENDED COMPLAINT CGC 1-

3 TABLE OF AUTHORITIES Cases In re Ariad Pharmaceuticals, Inc., F.d (1st Cir. 01)... AXA Versicherung AG v. New Hampshire Insurance Co., 1 F. App'x (d Cir. 0)... Benak v. Alliance Capital Management L.P., F.d (d Cir. 00)... Cetel v. Kirwan Financial Group, Inc., 0 F.d (d Cir. 00)... In re Countrywide Financial Corp. Mortgage-Backed Securities Litigation, F. Supp. d (C.D. Cal. 01)... In re Countrywide Financial Corp. Securities Litigation, F. Supp. d (C.D. Cal. 00)... 1,,, In re Exxon Mobil Corp. Securities Litigation, F. Supp. d 0 (D.N.J. 00)..., Freidus v. Barclays Bank PLC, F.d 1 (d Cir. 01)... Great Rivers Cooperative of Southeastern Iowa v. Farmland Industries, Inc., 10 F.d (th Cir. 1)... Guenther v. Cooper Life Sciences, Inc., F. Supp. 1 (N.D. Cal. )..., Herman & MacLean v. Huddleston, U.S. (1)... 1 In re Itel Securities Litigation, F.R.D. (N.D. Cal. )... 1 Lowinger v. Pzena Investment Management, Inc., 1 F. App'x 1 (d Cir. 00)... Medina v. Clovis Oncology, Inc., C.A. No. 1-0 RM MEH, 01 WL 0 (D. Colo. Feb., 01)..., Merck & Co., Inc. v. Reynolds, U.S. (0)... 1 In re Morgan Stanley Information Fund Securities Lit., F.d (d Cir. 0)... 1 Morse v. Peat, Marwick, Mitchell & Co., F. Supp. 1 (S.D.N.Y. 1)... ii DISMISSING FIRST AMENDED COMPLAINT CGC 1-

4 1 1 Pension Trust Fund for Operating Engineers v. Mortgage Securitization Transactions, Inc., 0 F.d (d Cir. 01)... Pinter v. Dahl, U.S. (1)... Travis v. Vanguard Group, Inc., C.A. No. 0-, 00 WL 0 (E.D. Pa. May 1, 00)..., Whirlpool Financial Corp. v. GN Holdings, Inc., F.d 0 (th Cir. 1)... Statutes 1 U.S.C. k... 1 U.S.C. 0a-(e)..., Regulations 1 C.F.R C.F.R. 0.1A... 1 C.F.R iii DISMISSING FIRST AMENDED COMPLAINT CGC 1-

5 ARGUMENT I. PLAINTIFFS CLAIMS ARE TIME-BARRED A. Merck Provides Additional Support for Dismissal In their opposition brief ( Opp. ), plaintiffs contend that Merck & Co., Inc. v. Reynolds, U.S. (0) precludes dismissal of the Amended Complaint on statute of limitations grounds. (Opp. Br. at -.) In reality, Merck reinforces the conclusion that plaintiffs claims are stale. As plaintiffs observe, under Merck, inquiry notice occurs when a reasonably diligent plaintiff would have sufficient information about [a claim] to adequately plead it in a complaint[.] (See Opp. at - (footnote omitted).) Relying on this principle, plaintiffs argue that the limitations period on their 1 Act claims did not start to run until August, 01 less than a year before they commenced this lawsuit when they purportedly first learned they had suffered damages. (See Opp. at.) This argument fails as a matter of law because, contrary to plaintiffs contention, damages are not an element of their 1 Act claims. Under Section of the Act, [i]f a plaintiff purchased a security issued pursuant to a registration statement, he need only show a material misstatement or omission to establish his prima facie case. Herman & MacLean v. Huddleston, U.S., (1); accord In re Countrywide Fin. Corp. Sec. Litig., F. Supp. d, n. 0 (C.D. Cal. 00) ( Damages are not an element of a Section claim). The same is true of plaintiffs Section 1 claims. In re Morgan Stanley Info. Fund Sec. Lit., F.d, (d Cir. 0) (damages not one of the elements of a prima facie claim under Section 1(a)() ); In re Itel Sec. Litig., F.R.D., (N.D. Cal. ) (same). Consequently, in this case, the statute of limitations started running when plaintiffs, after becoming ETF shareholders, were first placed on notice of the pertinent facts namely, the alleged Prospectus omissions regarding potential risks that might materialize in the event of another flash crash. And as this Court has held, plaintiffs were on notice of those facts more than one year before commencing this lawsuit. (Order at ; see also Defendants Opening Brief ( OB ) at -.) Thus, the date on which plaintiffs purportedly discovered their alleged damages is irrelevant and does nothing to alter the conclusion that their claims are time-barred. 1 DISMISSING FIRST AMENDED COMPLAINT CGC 1-

6 B. Storm Warnings First Appeared Years Before Commencement of this Lawsuit In its prior ruling, this Court rejected plaintiffs argument that there were no storm warnings, finding instead that there obviously were [storm] warnings... with the precise specificity of the claims in the complaint. (Order at.) Undaunted, plaintiffs once again contend in their opposition brief that defendants have failed to demonstrate even a single event that would have triggered a duty to inquire. (Opp. at.) This argument is no more meritorious now than it was before. This Court previously ruled that the publicly available reports disclosing the risks of loss posed by flash crashes were storm warnings that triggered plaintiffs duty of inquiry (the Storm Warnings ). (See Order at.) Plaintiffs nevertheless seek to reargue this finding on the ground that they affirmatively deny knowledge of those presumed storm warnings in their Amended Complaint. (Opp. at.) Plaintiffs allegations of ignorance, however, are unavailing as a matter of law. Actual knowledge is not required to start the limitations clock running because the test of inquiry notice is an objective one, meaning that plaintiffs are charged with constructive knowledge of Storm Warnings in the public domain. As explained by the Third Circuit Court of Appeals: [D]etermining inquiry notice... is an objective inquiry and hinges not on a plaintiff s actual awareness of suspicious circumstances or even on the ability of a plaintiff to understand their import. Instead, [i]t is enough that a reasonable investor of ordinary intelligence would have discovered the information and recognized it as a storm warning. This charge saddles the investor with responsibilities like reading prospectuses, reports, and other information related to the investments, and, additionally assumes knowledge of publicly available news articles and analyst s reports. Cetel v. Kirwan Financial Group, Inc., 0 F.d, 0 (d Cir. 00) (emphasis added) (citations omitted) (dismissing RICO claim as untimely); accord Freidus v. Barclays Bank PLC, F.d 1, 1- & n. (d Cir. 01) (defendant s public disclosures placed plaintiffs on constructive notice of their Section claims); Benak v. All. Capital Mgmt. L.P., F.d, 01 n.1 (d Cir. 00) (because the inquiry notice analysis is an objective one, whether plaintiffs read the articles or were aware of them is immaterial ); Travis v. Vanguard Group, Inc., C.A. No. 0-, 00 WL 0, at *-* (E.D. Pa. May 1, 00) (dismissing federal securities law DISMISSING FIRST AMENDED COMPLAINT CGC 1-

7 claim) The Eighth Circuit s decision in Great Rivers Coop. of Se. Iowa v. Farmland Indus., Inc., 10 F.d (th Cir. 1) (Opp. at -1), is readily distinguishable. While the Great Rivers court determined that it would not automatically impute public information to a plaintiff for purposes of determining inquiry notice, 10 F.d at, the court also admonished that plaintiffs will not necessarily avoid the statute of limitations by turning a blind eye to what is obviously in full view. Id. In that connection, as the Seventh Circuit observed in Whirlpool Fin. Corp. v. GN Holdings, Inc., F.d 0 (th Cir. 1), market information available on the internet plainly is in full view to investors: F.d at. In today s society, with the advent of the information superhighway, federal and state legislation and regulations, as well as information regarding industry trends, are easily accessed. A reasonable investor is presumed to have information available in the public domain, and therefore [a plaintiff] is imputed with constructive knowledge of this information. In this case, there were numerous reports on the internet describing the 0 Flash Crash, its impact on ETF shares, and the possibility of recurrence. Those reports first became available (and were easily accessible) shortly after the crash in 0, and continued to be published and updated through 01. (See RJN Exs. -1, 0-; FAC -1, -.) Moreover, the reports amounted to Storm Warnings because they contained information sufficiently detailed and specific to alert a reasonably diligent investor of the facts allegedly omitted from the Prospectuses with the precise specificity of the claims in the complaint in this case. (Order at.) Thus, at a minimum, when plaintiffs first purchased ETF shares more than a year prior to filing this lawsuit, a reasonably diligent purchaser of those shares would have had constructive knowledge, i.e., should have been aware, of the Storm Warnings in the public domain. (Id.) Consequently, plaintiffs claimed ignorance of the Storm Warnings does not and cannot avoid the bar of the statute of limitations. DISMISSING FIRST AMENDED COMPLAINT CGC 1-

8 C. The Storm Warnings Were Not Concealed According to plaintiffs, the Storm Warnings purportedly were buried from view because some of defendants marketing materials accurately described how ETFs operate under normal market conditions without also mentioning the 0 Flash Crash. (See Opp. at -, 1-1.) There is, however, no basis in law or logic for plaintiffs suggestion that to trigger inquiry notice, Storm Warnings must appear in every document disseminated by defendants regarding ETF shares. As demonstrated in defendants' opening brief (OB at -), the pertinent question is whether the Storm Warnings were concealed from reasonably diligent investors, and the answer is plainly no. Indeed, it remains undisputed that BlackRock and others repeatedly made public disclosures specifically identifying the risks of executing stop loss orders on ETF shares during a flash crash or other periods of market volatility. (See RJN Exs. -, -1, 1, 1-,, ; FAC -1,, -0, -.) Moreover, the ishares Prospectuses disclosed the risk that any significant market volatility whatever its cause could produce significant discounts to the NAV of ETF shares. (E.g., RJN Ex. 1 at S-,.) Because plaintiffs had constructive notice of those disclosed risks, any actions [purportedly] taken by [defendants]... to conceal those risks would not toll the statute of limitations in this case because the [Storm Warnings and the Prospectuses] themselves would have given [plaintiffs] sufficient knowledge to place them on inquiry notice of the risks they now claim were omitted from the Prospectuses. AXA Versicherung AG v. New Hampshire Ins. Co., 1 F. App x, 0 (d Cir. 0). D. The Storm Warnings Covered the Claims in the FAC According to plaintiffs, the Storm Warnings purportedly do not address all of the risk omissions or misrepresentations alleged in the FAC. (Opp. at 1.) Even if this assertion were accurate, which it is not, it is beside the point because storm warnings need not detail every aspect of the alleged fraudulent scheme: An investor does not have to have notice of the entire fraud being perpetrated to be on inquiry notice. AXA, 1 F. App x at (citation omitted). In any event, the allegations of the FAC and the disclosures in judicially noticeable documents demonstrate that all of the information allegedly omitted from the ishares Prospectuses DISMISSING FIRST AMENDED COMPLAINT CGC 1-

9 (see Opp. at 1) appeared in the public domain more than a year before commencement of this lawsuit, including: defendants belief that use of stop loss orders is inappropriate (FAC ); defendants views regarding liquidity issues in volatile markets (id. ); defendants belief that a flash crash could recur (id., ); the 0 Flash Crash resulted in market prices for ETF shares reflecting a discount of 0% from pre-crash prices or the Funds NAV (RJN Exs. -, 1- ; FAC, 1 n.1); and the SEC s new rules regarding the discretion of market makers to cancel stop loss orders. (FAC (l) & n.0.) In light of these disclosures, plaintiffs were on notice of sufficient information to plead their claims well before commencing this litigation. 1 E. Plaintiffs Efforts to Distinguish Defendants Authorities Are Unavailing In attempting to distinguish the authorities cited by defendants in their Opening Brief, plaintiffs appear to manufacture legal principles out of whole cloth. For example, contrary to plaintiffs suggestion (Opp. at 1), no case holds that to trigger inquiry notice, a storm warning must post-date the accrual of plaintiffs claims, which in this case accrued when plaintiffs first purchased ETF shares. See Lowinger v. Pzena Inv. Mgmt., Inc., 1 F. App x 1, 1-1 (d Cir. 00) (under Sections and 1 of the 1 Act, liability accrues if either the registration statement or prospectus includes any untrue statement of material fact or omission of material fact) (citation omitted). Indeed, as courts have found, storm warnings may trigger inquiry notice even where, as here, a number of the warnings pre-dated accrual, i.e., they first entered the public domain before plaintiffs claims accrued, such that accrual and inquiry notice occurred at or about the same time. See In re Exxon Mobil Corp. Sec. Litig., F. Supp. d 0, 1, (D.N.J. 00), aff d, 00 F.d 1 (d Cir. 00). 1 In their opposition brief, plaintiffs repeat the conclusory assertion of the original complaint that ishares Funds especially, were subject to structural illiquidity. (See Opp. at 1.) As before, however, plaintiffs allege no facts to show any difference between ishares Funds and other comparable ETFs with respect to liquidity or volatility risks. (Cf. FAC (in the 0 Flash Crash, numerous ETFs traded 0% lower than the value of their underlying assets ); RJN Ex. ( [a]ll of the ETFs that fell more than 0% during flash crash were stock ETFs ).) DISMISSING FIRST AMENDED COMPLAINT CGC 1-

10 1 1 In Exxon, plaintiffs challenged the accuracy of a merger proxy statement disseminated to shareholders in April 1. Plaintiffs alleged that the proxy was materially false and misleading in violation of the federal securities laws because it failed to disclose a $. billion impairment to the value of Exxon s oil and gas fields. F. Supp. d at. The court dismissed those claims as time-barred, holding that plaintiffs were on notice of the alleged proxy violations as soon as they received the proxy statement in April 1. Id. at 1. At that point in time, the court ruled, plaintiffs should have been aware of the impairment information allegedly omitted from the proxy in light of publicly available reports, appearing as early as 1, of steep drops in oil prices that adversely affected the entire oil and gas industry, forcing a number of Exxon s competitors to record asset impairments in 1. Id. at 1-1. Thus, in Exxon, the court concluded that inquiry notice had been triggered by storm warnings that first appeared in the public domain more than one year before plaintiffs proxy claim accrued. Id. at 1. Exxon therefore undermines plaintiffs argument here that Storm Warnings first appearing in 0 had no impact because they predated 1 plaintiffs purchase of ETF shares. Plaintiffs are deemed to have constructive notice of those 1 1 warnings upon purchasing ETF shares, and their failure to commence suit within one year of such notice is fatal to their 1 Act claims II. PLAINTIFFS LACK STANDING TO SUE A. Section 1. Rule 1 is Irrelevant Plaintiffs arguments regarding Rule 1 promulgated under the 1 Act are a red herring. 1 According to plaintiffs, the rule is inapposite because ETFs cannot file shelf registrations under the rule. (Opp. at.) But defendants have not cited, much less relied on, Rule 1, and the rule Plaintiffs other efforts at distinguishing defendants authorities are equally unavailing given that, contrary to plaintiffs suggestions (Opp. at 1-1), no opinion holds that (a) plaintiffs in all cases must have actual knowledge of storm warnings to trigger inquiry notice; (b) every storm warning must be issuer specific (although many in this case were issuer specific (see RJN Exs., -, 1, 0-, )) (cf. Pension Trust Fund for Operating Eng rs v. Mortg. Securitization Transactions, Inc., 0 F.d, (d Cir. 01); Exxon, F. Supp. d at 1-1); or (c) storm warnings must appear in SEC filings or in the headlines of news articles. DISMISSING FIRST AMENDED COMPLAINT CGC 1-

11 does nothing to alter the tracing requirements applicable to plaintiffs claim under Section of the 1 Act.. There is No Automatic Tracing Contrary to plaintiffs contention, not [e]very sale of an ETF [share] is traceable, by law, to the most recent pre-sale amended registration statement. (Opp. at.) This argument is based heavily on Section (e) of the ICA (id. at -), which provides in pertinent part as follows: For the purposes of Section of the [1 Act], the effective date of the latest amendment filed shall be deemed the effective date of the registration statement with respect to securities sold after such amendment shall have become effective. 1 U.S.C. 0a-(e). This provision does not, as plaintiffs contend, authorize automatic tracing of ETF shares to the last amended registration statement to become effective before plaintiffs share purchases. See Guenther v. Cooper Life Scis., Inc., F. Supp. 1, 10 (N.D. Cal. ) (rejecting argument that an otherwise non-defective 1 registration statement is rendered retroactively blemished by [a] defective 1 amendment ). After a registration statement covering continuously offered securities has been amended, the consequences for Act liability purposes are that each new offering (or other event that requires amending the registration statement) creates potential new liability to those who acquired 1 the security under the registration statement after the amendment s effective date. In re 1 Countrywide Fin. Corp. Sec. Litig., F. Supp. d, (C.D. Cal. 00) (emphasis 0 added). The creation of potential liability post-amendment, however, does not mean shares 1 purchased in the secondary market are automatically traceable to an amended registration statement. For potential liability to become actual liability, the tracing requirements of Section must be satisfied. In the same vein, whether defendants conducted a shelf offering under Rule 1 is also irrelevant. (See Opp. at.) Plaintiffs admit, as they must, that ishares Trust conducts continuous offerings of ETF shares. (FAC 1) Those offerings are of the same variety as shelf offerings. Cf. 1 C.F.R. 0.1 (shelf offering regulation titled Delayed or continuous offering and sale of securities ). DISMISSING FIRST AMENDED COMPLAINT CGC 1-

12 Section (a) of 1 Act provides that if any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact, then any person acquiring such security pursuant to the registration statement has standing to sue a variety of [defendants]. Countrywide, F. Supp. d at (emphasis added) (citation omitted). For tracing purposes, the registration statement in the first clause of is not the same in every respect as the registration statement for a particular security because parts of the registration statement [i.e., prospectuses] may bec[o]me effective at different times. Id. at (citation omitted). In this case, for example, plaintiffs purchased ETF shares in the secondary market after the completion of initial public offerings that occurred between 000 and 00. Moreover, by the time plaintiffs purchased their shares, the original registration statements and prospectuses used in the initial offerings had been amended repeatedly. (See OB at -1 & n..) Under the circumstances, plaintiffs still must satisfy the tracing requirements of Section. Countrywide, F. Supp. d at -. Specifically, where, as here, the registration statement used in an initial public offering is amended before plaintiffs purchase shares in the secondary market, plaintiffs must show that both the initial and the amended registration statements "share[d] common 'parts' that... were false and misleading at each effective date." Id. at. The foregoing requirements are not, as plaintiffs contend, altered by Section (e) of the ICA. (Opp. at.) Like the analogous rule governing non-investment companies, namely, 1 C.F.R..1, Section (e) eliminates the scenario where "the statute of limitations could run on a section claim in a continuous offering before investors... even purchase their securities." See Guenther, F. Supp. at 10. The tracing requirements, however, are a different matter and apply even when a claim arguably is timely, e.g., it has been brought less than three years after the effective date of the operative amended registration statement. See 1 U.S.C. k, 0a-(e); see also Morse v. Peat, Marwick, Mitchell & Co., F. Supp. 1, (S.D.N.Y. 1) (Congress viewed Section (e) as "simply a means of maintaining the status quo with respect to the liability of investment companies under of the Securities Act"). Section (e) therefore is irrelevant to the issue of tracing. DISMISSING FIRST AMENDED COMPLAINT CGC 1-

13 Plaintiffs have made no effort in this case to trace their ETF shares, other than to baldly allege traceability in the FAC and contend in their opposition brief that the shares are automatically traceable to the last amended registration statement that became effective before they purchased the shares. As Countrywide establishes, far more is required. Given that shares of the ishares Funds were first registered for sale in 1 and first sold to the public in secondary market transactions under initial registration statements that became effective between May, 000 and July, 00 (see OB at -1 & n.), to satisfy the tracing requirements of Section, plaintiffs must allege facts sufficient to (a) trace their ETF shares to the registration statements used in the initial public offering of those shares; (b) identify the parts (i.e., prospectuses) appended to those registration statements that were materially false and misleading; and (c) show that the same misstatements remained in the prospectuses appended to the amended registration statements in effect on the dates plaintiffs purchased ETF shares. See Countrywide, F. Supp. d at. Plaintiffs have not made the requisite showings, warranting dismissal of their Section claim for lack of standing. B. Section 1(a)() Plaintiffs do not dispute that most courts to have considered the issue have ruled that Section 1(a)() does not apply to secondary market trading. Rather, they contend that Section 1(a)() applies here to plaintiffs secondary market purchases because all ETF shares traded in the secondary market are considered to be sold pursuant to an initial public offering. (Opp. at.) Plaintiffs, however, have cited no authority holding that secondary market trading may be deemed an initial public offering under any circumstances, perhaps because the law is to the contrary. Indeed, plaintiffs admitted purchases of ETF shares in the open market preclude[ ] [the] possibility that the purchases occurred in an initial public offering. See In re Ariad Pharm., Inc., F.d, (1st Cir. 01). There also is no merit to plaintiffs contention that [a]n issuer is always liable as a seller under 1(a)(). (Opp. at.) To qualify as a seller, a defendant must pass[] title, or other interest in the security, to buyer for value. Pinter v. Dahl, U.S., (1). This creates an express privity requirement, giving a cause of action only to individuals who purchase securities directly from a person who sells the securities by means of a prospectus. Medina v. DISMISSING FIRST AMENDED COMPLAINT CGC 1-

14 Clovis Oncology, Inc., C.A. No. 1-0 RM MEH, 01 WL 0, at *0 (D. Colo. Feb., 01) (emphasis added) (citation omitted). By plaintiffs own admission, they did not purchase any ETF shares directly from defendants; rather, they purchased the shares in anonymous transactions over the exchange. (FAC ; see also Opp. at ( ETFs are allowed... to sell only to Authorized Participants... [who] are then allowed to sell to... the secondary market. ).) Plaintiffs therefore lack standing to sue under Section 1(a)(). In re Countrywide Fin. Corp. Mortg.-Backed Sec. Litig., F. Supp. d, 1 (C.D. Cal. 01). CONCLUSION In the Order, this Court granted plaintiffs leave to replead to attempt to show that their claims are timely. Plaintiffs accepted that invitation by filing their Amended Complaint, which defendants again have moved to dismiss, first and foremost on the ground that the amended pleading, despite its newly added allegations, remains barred by the applicable statute of limitations. In response, plaintiffs have relegated their statute of limitations arguments to a few pages toward the back of their opposition brief, a move that speaks volumes about their inability to salvage their stale claims. But having failed once again to show that their claims are timely, the Amended Complaint should be dismissed with prejudice DATED: April, 01 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP By: /s/ Raoul D. Kennedy RAOUL D. KENNEDY Attorneys for Defendants ishares Trust, BlackRock, Inc., BlackRock Fund Advisors, BlackRock Investments, LLC, Manish Mehta, Mark Wiedman, Robert S. Kapito and Jack Gee 1 C.F.R. 0.1A (Opp. at n.) is not to the contrary because, by its terms, it applies only to primary offering[s], not secondary trading. In all events, the rule effectively has been nullified in light of a recent ruling finding that the SEC exceeded its authority in adopting the rule. See In re Countrywide Fin. Corp. Mortg.-Backed Sec. Litig., F. Supp. d, 1 (C.D. Cal. 01). Last and certainly least BlackRock did not submit a letter to the SEC admit[ting] that [ETF] investors in the secondary market are the intended recipients of each prospectus. (Opp. at & n.) The letter referenced by plaintiffs in their opposition brief was submitted by Barclays Global Fund Advisors, an entity not affiliated with BlackRock. DISMISSING FIRST AMENDED COMPLAINT CGC 1-