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Case 1:09-cv-01989-PAC Document 50 Filed 08/03/10 Page 1 of 16

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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In re BARCLAYS BANK PLC
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SECURITIES LITIGATION
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This Document Relates To:
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ALL ACTIONS



Master File No. 1:09-cv-01989 (PAC)



REPLY MEMORANDUM OF LAW IN FURTHER

SUPPORT OF THE BARCLAYS DEFENDANTS’ MOTION

TO DISMISS THE CONSOLIDATED AMENDED COMPLAINT







August 3, 2010



David H. Braff (DB-0761)
Michael T. Tomaino, Jr. (MT-6200)
Ryan C. Williams (RW-1275)
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, NY 10004
(212) 558-4000 (Telephone)
(212) 558-3588 (Fax)

Attorneys for the Barclays Defendants

Case 1:09-cv-01989-PAC Document 50 Filed 08/03/10 Page 2 of 16







TABLE OF CONTENTS

Page
PRELIMINARY STATEMENT .....................................................................................................1 

ARGUMENT ...................................................................................................................................2 

I. 

THE COMPLAINT DOES NOT ALLEGE ANY ACTIONABLE
MISSTATEMENTS OR OMISSIONS. ..............................................................................2 

A. 

B. 

C. 

Barclays Had No Duty to Itemize Separately the Specific
Categories of Its Mortgage-Related Assets.. ............................................................2 

The Complaint Fails to State a Claim Concerning Barclays’
Statements About the Value of Its Mortgage-Related Assets ..................................4 

The Challenged Statements Concerning Barclays’ Risk
Management Policies Are Not Actionable ..............................................................6 

PLAINTIFFS’ CLAIMS WITH RESPECT TO THE SERIES 2, 3
AND 4 OFFERINGS ARE TIME BARRED. .....................................................................7 

LEAD PLAINTIFFS LACK STANDING UNDER SECTION
12(a)(2). ...............................................................................................................................9 

II. 

III. 

CONCLUSION ..............................................................................................................................10 






Case 1:09-cv-01989-PAC Document 50 Filed 08/03/10 Page 3 of 16

TABLE OF AUTHORITIES

Page(s)




CASES

Dodd v. Cigna Sec., Inc.,

12 F.3d 346 (2d Cir. 1993).........................................................................................................8

ECA and Local 134 IBEW Joint Pension Trust of Chi. v. JP Morgan Chase Co.,

553 F.3d 187 (2d. Cir. 2009)..................................................................................................7, 8

Fait v. Regions Financial Corp.,

No. 09 Civ. 3161 (LAK), 2010 WL 1883487 (S.D.N.Y. May 10, 2010) ..............................4, 5

Freudenberg v. E*Trade Fin. Corp.,

No. 07 Civ. 8538, 2010 WL 1904314 (S.D.N.Y. May 11, 2010) ......................................1, 3, 6

Ganino v. Citizen Utils. Co.,

228 F.3d 154 (2d Cir. 2000).......................................................................................................8

In re Ambac Fin. Group, Inc. Sec. Litig.,

693 F. Supp. 2d 241 (S.D.N.Y. 2010) ....................................................................................5, 6

In re Citigroup, Inc. Bond Litig.,

No. 08 Civ 9522 (SHS), 2010 WL 2772439 (S.D.N.Y. July 12, 2010) ......................2, 3, 5, 10

In re Converium Holding AG Sec. Litig.,

No. 04 Civ. 7897 (DLC), 2006 WL 3804619 (S.D.N.Y. Dec. 28, 2006) ..................................9

In re Livent, Inc. Noteholders Sec. Litig.,

151 F. Supp. 2d 371 (S.D.N.Y. 2001) ........................................................................................8

In re JWP Inc. Sec. Litig.,

928 F. Supp. 1239 (S.D.N.Y. 1996) ...........................................................................................9

In re MBIA, Inc. Sec. Litig.,

No. 08-CV-264 (KMK), 2010 WL 1253925 (S.D.N.Y. Mar. 31, 2010) ...............................2, 3

In re Moneygram Int’l, Inc. Sec. Litig.,

626 F. Supp. 2d 947 (D. Minn. 2009) ........................................................................................3

In re New Century,

588 F. Supp. 2d 1206 (C.D. Cal. 2008) .....................................................................................6

In re RAIT Fin. Trust Sec. Litig.,

No. 2:07-cv-03148-LDD, 2008 WL 5378164 (E.D. Pa. Dec. 22, 2008) ...................................6



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Case 1:09-cv-01989-PAC Document 50 Filed 08/03/10 Page 4 of 16





TABLE OF AUTHORITIES

(continued)

Page(s)

In re Vivendi Universal, S.A. Sec. Litig.,

381 F. Supp. 2d 158 (S.D.N.Y. 2003) ....................................................................................5, 6

Merck & Co. v. Reynolds,

130 S. Ct. 1784 (2010) ...........................................................................................................7, 8

New Jersey Carpenters Health Fund v. DLJ Mortgage Capital, Inc.,

No. 08 Civ. 5653 (PAC), 2010 WL 1473288 (S.D.N.Y. Mar. 29, 2010) ..................................5

Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp.,

No. 08-10446-RGS, 2009 WL 3149775 (D. Mass. Sept. 30, 2009) ....................................9, 10

Public Employee Retirement Sys. of Mississippi v. Merrill Lynch & Co., Inc.,

No. 08 Civ. 10841(JSR), 2010 WL 2175875 (S.D.N.Y. June 1, 2010) ...........................8, 9, 10

Rombach v. Chang,

355 F.3d 164 (2d Cir. 2004).......................................................................................................6

Rubin v. MF Global, Ltd.,

634 F. Supp. 2d 459 (S.D.N.Y. 2009) ........................................................................................7

STATUTES

15 U.S.C. § 77m ...............................................................................................................................8

28 U.S.C. § 1658(b)(1) ....................................................................................................................8







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PRELIMINARY STATEMENT

Plaintiffs begin their opposition brief by quoting Judge Sweet’s observation that

the “collapse of the subprime mortgage and the housing markets . . . were widely recognized” by

the fall of 2007, and many large financial institutions publicly announced “crippling write-downs

of mortgage-related assets” in October 2007. (Pls. Opp. at 1 (quoting Freudenberg v. E*Trade

Fin. Corp., No. 07 Civ. 8538, 2010 WL 1904314 (S.D.N.Y. May 11, 2010). ) Plaintiffs then

assert that “Barclays was clearly not taking crippling writedowns of its mortgage-related assets”

during this period. (Id. (emphasis in original).) Plaintiffs’ own Complaint, however,

acknowledges that Barclays did, in fact, publicly announce £1.5 billion in write downs of its

mortgage-related assets in November 2007. (See CAC ¶¶ 114-15; see also Perrin Decl. Ex. J.)1

As the months progressed, and the financial crisis unfolded, Barclays announced additional write

downs. (Perrin Decl. Exs. I, K and U.)

With the full benefit of hindsight, Plaintiffs claim that Barclays should have

predicted, better and earlier, the breadth and depth of the unprecedented financial crisis. They

complain, in essence, that Barclays did not write down the value of its mortgage-related assets as

early (or as steeply) as other financial institutions did. Conspicuously absent from Plaintiffs’

Complaint, however, are any non-conclusory allegations supporting an inference that Barclays’

subjective asset valuations were false at the time they were made, or that Barclays did not, in

fact, believe that those valuations were reasonable. Absent such allegations, the Complaint fails

to state a claim under Sections 11 and 12(a)(2) of the Securities Act of 1933, and thus Section

15, as a matter of law. Moreover, because Plaintiffs delayed bringing suit for more than one year

1
April 19, 2010 (“Perrin Decl.”), which was submitted with the Barclays Defendants’ opening brief in
support of their motion to dismiss. References to “CAC” are to Plaintiffs’ Consolidated Amended
Complaint, a copy of which is attached as Exhibit A to the Perrin Declaration.

References herein to “Ex. __” are to exhibits to the Declaration of Christopher A. Perrin, dated



Case 1:09-cv-01989-PAC Document 50 Filed 08/03/10 Page 6 of 16



after Barclays publicly disclosed the very information that Plaintiffs claim was actionably

omitted from the Series 2, 3 and 4 ADS Offering Documents, their claims with respect to those

Offerings are time barred. The Complaint should be dismissed in its entirety, with prejudice.

I.

THE COMPLAINT DOES NOT ALLEGE ANY ACTIONABLE
MISSTATEMENTS OR OMISSIONS.

ARGUMENT

A.

Barclays Had No Duty to Itemize Separately the Specific Categories of Its
Mortgage-Related Assets.

The cases cited in Barclays’ opening brief make clear that nothing in the federal

securities laws imposes upon an issuer a duty to disclose granular detail concerning the specific

composition of its mortgage portfolio. (See Barclays’ Opening Br. at 13-15.) Plaintiffs’

erroneous argument to the contrary relies principally upon two recent decisions from courts in

this District—Judge Karas’s decision in In re MBIA, Inc. Sec. Litig., No. 08-CV-264 (KMK),

2010 WL 1253925 (S.D.N.Y. Mar. 31, 2010), and Judge Stein’s decision in In re Citigroup, Inc.

Bond Litig., No. 08 Civ 9522 (SHS), 2010 WL 2772439 (S.D.N.Y. July 12, 2010).2 Plaintiffs

claim that these decisions support an affirmative disclosure duty to “break[] out mortgage-related

asset holdings, ‘as distinct from the aggregate total of a multi-sector portfolio.’” (Pls. Opp. at 19

(quoting In re MBIA, 2010 WL 1253925, at *10).) Neither case supports such a duty. Instead,

each involved allegations—not present here—that the defendants’ disclosures about certain

categories of mortgage-related assets contained false statements.

In MBIA, the defendant had separately disclosed its holdings of “Multi-Sector

CDOs with U.S. RMBS” and “other CDOs” in its financial reports, but plaintiffs alleged that a

significant portion of the “other CDOs” were misclassified because they, in fact, “contain[ed]

2
submitted after they filed their Opposition Brief.

Plaintiffs’ discussion of Citigroup appears in a July 19, 2010 letter to the Court, which Plaintiffs



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RMBS.” In re MBIA, 2010 WL 1253925, at *2, 10. Similarly, in Citigroup, plaintiffs alleged

that the defendant’s offering materials falsely stated that “Citigroup had no direct exposure to

subprime mortgage-backed CDOs” when, in fact, Citigroup allegedly “held nearly $30 billion in

subprime backed CDOs and had guaranteed another $25 billion and a had a total of nearly $66

billion in direct CDO exposure.” 2010 WL 2772439 at *3.

Thus, both cases merely stand for the unremarkable proposition that, once an

issuer voluntarily undertakes to make disclosures about specific categories of assets, those

disclosures must be accurate. But nothing in either decision suggests that an issuer has an

affirmative duty to make itemized disclosures about the various subcategories of mortgage-

related assets that make up its overall portfolio.3 Indeed, in Citigroup, Judge Stein expressly

rejected plaintiffs’ Section 11 and 12(a)(2) claims predicated on Citigroup’s alleged omission of

details concerning its exposure to auction-rate securities because plaintiffs “identif[ied] neither

an independent duty” to disclose such information, “nor any statement or statements that were

‘misleading’” in the absence of information concerning those assets. Id. at *23. Here, Barclays

made substantial disclosures regarding its aggregate holdings of mortgage-related assets, and it

did not have a duty to break down and itemize those assets into separate subcategories.4

Nor do the other authorities Plaintiffs cite support the existence of such an obligation. See, e.g.,


3
E*TRADE, 2010 WL 1904314, at *8-9 (finding plaintiffs’ non-disclosure claims sufficient based on
allegations that defendants misrepresented that loans were “superprime” when many were not even
“prime”); In re Moneygram Int’l, Inc. Sec. Litig., 626 F. Supp. 2d 947, 974 (D. Minn. 2009) (allegations
that defendant’s accounting ledger remained open in violation of internal controls because of problems
with accurately valuing its asset-backed securities, “permit[ted] an inference that defendants had access to
valuation information contradicting [its] public financial statements”).
4
Nothing in Item 503 requires granular disclosure of an issuer’s separate subcategories of mortgage-related
assets. Here, Barclays fully complied with Item 503 by identifying various “Risk Factors” that might
affect its business, including the possibility that an economic downturn or higher interest rates could
affect the credit quality of Barclays’ balance sheet and off-balance sheet assets. (See Barclays’ Opening
Br. at 5-8, 13-14.)

Plaintiffs’ reliance (Pls. Opp. at 21-22) on Item 503 of SEC Regulation S-K is misplaced.



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B.

The Complaint Fails to State a Claim Concerning Barclays’ Statements
About the Value of Its Mortgage-Related Assets.

Barclays’ opening brief (at 15-17) cited numerous decisions from courts in this

District and elsewhere recognizing that asset valuation and write down decisions of the type

challenged by Plaintiffs involve inherently subjective assessments of the future performance of

highly illiquid assets. Now, Plaintiffs urge the Court to ignore those cases on the ground that

they supposedly did not involve the “record[ing] [of] asset impairments,” which Plaintiffs assert

involves “an actionable statement of fact.” (Pls. Opp. at 23-24.) But in a recent decision issued

after Barclays filed its opening brief, Judge Kaplan specifically rejected such a distinction:

[T]he goodwill reflected in the 2007 10-K was the excess of the acquisition price,
an objective fact, over the fair value of AmSouth’s assets at the time of the
acquisition. The fair value of those assets, the majority of which consisted of the
value of AmSouth’s loan portfolio, however, was not a matter of objective fact.
Those assets were not traded on the New York Stock Exchange or some other
efficient market where the fair market value typically is the price at which a share
or other asset is trading at any given moment. . . . Given the lack of any objective
or readily determinable value for the AmSouth assets acquired in the acquisition,
“the question of material falsity” of the stated goodwill “is whether the
representation was false—not because the value [was] ‘wrong’ in some empirical
sense, but because” the financial statement in the 10-K did not reflect
management’s “honest opinion.”

Fait v. Regions Financial Corp., No. 09 Civ. 3161 (LAK), 2010 WL 1883487, at *4 (S.D.N.Y.

May 10, 2010) (emphasis added) (quoting Fraternity Fund Ltd. v. Beacon Hill Asset Mgmt.,

LLC, 479 F. Supp. 2d 349, 361-63 (S.D.N.Y. 2007)). Because the plaintiffs in Fait, like

Plaintiffs here, “specifically disclaim[ed] any . . . allegation” that defendant had knowingly or

recklessly misstated the reported value of its goodwill, Judge Kaplan ruled that they failed to

state a claim under Sections 11 and 12(a)(2). Id.

The Fait plaintiffs also argued that they did not have to plead defendants’

knowledge of falsity because it is not an element of a Section 11 or 12(a)(2) claim. Judge

Kaplan rejected that argument as “singularly unpersuasive” and as “conflict[ing] with abundant



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case law in this Circuit.” 2010 WL 1883487, at *5 n.55 (collecting cases). Plaintiffs here make

the same argument, and this Court should reach the same result, just as it did in New Jersey

Carpenters Health Fund v. DLJ Mortgage Capital, Inc., No. 08 Civ. 5653 (PAC), 2010 WL

1473288 (S.D.N.Y. Mar. 29, 2010), where it held that “subjective opinions—as opposed to

statements of fact—are only actionable under the Securities Act if a complaint alleges that the

speaker did not truly have the opinion at the time it was made public.” Id. at *7.5

The cases Plaintiffs cite (Pls. Opp. at 23-26) to argue that Barclays’ subjective

asset valuations and write down decisions are actionable are all distinguishable because the

plaintiffs in those cases, unlike here, pleaded facts sufficient to support an inference that the

defendants did not genuinely believe their opinion statements at the time they were made. For

example, in In re Ambac Fin. Group, Inc. Sec. Litig., 693 F. Supp. 2d 241 (S.D.N.Y. 2010),

Judge Buchwald explicitly premised her denial of the defendants’ motion to dismiss on the

existence of allegations supporting “a strong inference of scienter in the actions of defendants.”

Id. at 271-73. Similarly, in In re Vivendi Universal, S.A. Sec. Litig., 381 F. Supp. 2d 158

(S.D.N.Y. 2003), which Judge Kaplan described in Fait as “plainly . . . distinguishable,” 2010

WL 1883487, at *4 n.45, the court found that the complaint supported a permissible inference

that the defendant’s former management knew its valuation decisions were unreasonable based

on allegations that the company’s new management took significant, unexplained write downs of

assets immediately after taking control of the company. See In re Vivendi, 381 F. Supp. 2d. at


5
The fact that Barclays later wrote down its mortgage-related assets does not support a permissible
inference that its earlier asset valuations and write down decisions were known to be false (or even were
objectively unreasonable) at the time they were made. As Judge Stein observed in Citigroup, “plaintiffs
cannot ‘reverse engineer[]’ Section 11 claims by alleging ‘[what] only became clear [due] to subsequent
events was somehow known to [defendant] far earlier in time.’” 2010 WL 2772439 at *21 (quoting
Panther Partners, Inc. v. Ikanos Comms., Inc., 538 F. Supp. 2d 662, 669 (S.D.N.Y. 2008) (Crotty, J.)).



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176-77.6 Here, in contrast, Plaintiffs expressly disclaim any allegations “that could be construed

as alleging . . . intentional or reckless misconduct.” (CAC ¶¶ 212, 223, 229.)7

C.

The Challenged Statements Concerning Barclays’ Risk Management Policies
Are Not Actionable.

Plaintiffs do not allege facts sufficient to support an inference that Barclays failed

to comply with its own stated risk management policies or that those policies were deficient in

any way. (See Barclays’ Opening Br. at 19-21.) Moreover, the statements concerning risk

management that Plaintiffs point to as allegedly misleading (see, e.g., Pls. Opp. at 29-30) are so

general and non-specific as to be immaterial as a matter of law. See, e.g., ECA and Local 134

IBEW Joint Pension Trust of Chi. v. JP Morgan Chase Co., 553 F.3d 187, 205-06 (2d. Cir. 2009)

(finding general descriptions concerning a defendant’s risk management policies to be


6
See also, e.g., E*TRADE, 2010 WL 1904314, at *18 (“As alleged in the Complaint, this is not a
case of ‘failure to predict’ riskiness or future mortgage market downturns but [an] instance where loans
were internally known to be of poor quality, inadequately reviewed, improperly described and highly
risky at the time they were purchased.”) (emphasis added); In re RAIT Fin. Trust Sec. Litig., No. 2:07-cv-
03148-LDD, 2008 WL 5378164, at *7 (E.D. Pa. Dec. 22, 2008) (“Plaintiffs make several factual
allegations supporting the conclusion that RAIT knew about other-than-temporary impairments that would
have been noted if RAIT was in compliance with GAAP.”) (emphasis added); In re New Century, 588 F.
Supp. 2d 1206, 1226-27, 1229-31 (C.D. Cal. 2008) (finding allegations sufficient where complaint
alleged facts “depict[ing] a profound effort to mask New Century’s declining loan performance” and
“suggest[ing] misrepresentations that did not turn on the outcome of future events”).
7
fair market value of its illiquid assets, Barclays’ valuation statements also reflected forward-looking
projections concerning the likely future performance of those assets. Because Barclays explicitly
identified these forward-looking statements as such in its ADS Offering Documents, and explicitly
described the specific risks inherent in such projections, these statements are protected by the statutory
“safe harbor” provision of the PSLRA and/or the judicially created “bespeaks caution” doctrine. (See
Barclays’ Opening Br. at 17-19.) Plaintiffs seek to characterize these forward-looking statements as
statements of existing fact that are ineligible for such protection (Pls. Opp. at 26-29), but the very
authorities they cite refute their argument. See, e.g., Rombach v. Chang, 355 F.3d 164, 172-74 (2d Cir.
2004) (bespeaks caution doctrine protects optimistic statements concerning integration of facilities
following recently completed merger); In re Ambac, 693 F. Supp. 2d at 281 (financial statements based
on projections concerning “the value of Ambac’s mark-to-market losses and credit impairments” were
forward-looking statements protected by bespeaks caution doctrine).

In addition to reflecting management’s then-current, subjective opinions regarding the probable



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immaterial and non-actionable as a matter of law); Rubin v. MF Global, Ltd., 634 F. Supp. 2d

459, 472-73 (S.D.N.Y. 2009) (same).

Plaintiffs attempt to distinguish these authorities by asserting that Barclays’ risk

management descriptions were designed to “differentiate[]” Barclays by “assuring” investors that

its risk management policies would cause it to “outperform” its competitors. (See Pls. Opp. at 32

n.33.) But Plaintiffs do not point to a single concrete assertion anywhere in Barclays’ public

filings that either directly compared Barclays’ risk management policies to those of its

competitors or that “assured” investors that its policies would enable it to avoid write downs.

Instead, Barclays specifically cautioned investors that its risk management policies were not

guarantees against loss and that it was neither possible nor desirable to eliminate business risk

completely. (See, e.g., Perrin Decl. Ex. G at 29, 58; id. Ex. H at 60, 86.) Plaintiffs have thus

identified no plausible basis for distinguishing Barclays’ risk-management statements from the

substantially similar descriptions found to be non-actionable as a matter of law in the decisions

cited in Barclays’ opening brief.

II.

PLAINTIFFS’ CLAIMS WITH RESPECT TO THE SERIES 2, 3 AND 4
OFFERINGS ARE TIME BARRED.

Plaintiffs urge the Court to ignore settled Second Circuit precedent interpreting

Section 13 of the Securities Act, the limitations provision applicable to their Section 11, 12 and

15 claims, contending that the Supreme Court “recently rejected the ‘inquiry notice’ standard” in

Merck & Co. v. Reynolds, 130 S. Ct. 1784 (2010). (Pls. Opp. at 12.) The Merck case, however,

did not involve Securities Act claims. Instead, it addressed the “inquiry notice” standard for

purposes of the statute of limitations applicable to claims under Section 10(b) of the Securities



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Exchange Act of 1934.8 As Judge Rakoff recently observed, “the Second Circuit has not yet had

occasion to determine whether Merck requires” any change in how Section 13 of the Securities

Act is interpreted. Public Employee Retirement Sys. of Mississippi v. Merrill Lynch & Co., Inc.,

No. 08 Civ. 10841(JSR), 2010 WL 2175875, at *2 (S.D.N.Y. June 1, 2010); cf. Dodd v. Cigna

Sec., Inc., 12 F.3d 346, 349-50 (2d Cir. 1993) (holding that one-year limitations period under

Section 13 begins to run when plaintiff acquires either actual notice or inquiry notice).

Nevertheless, even under the “inquiry notice” standard articulated in Merck for

Section 10(b) claims, Plaintiffs’ claims here would still be time barred because Barclays’

November 2007 and February 2008 disclosures publicly revealed the very information that

Plaintiffs claim should have been disclosed in connection with the Series 2, 3 and 4 Offerings—

namely, detailed information concerning Barclays’ exposure to particular categories of

mortgage-related assets. (See Barclays’ Opening Br. at 23-25.)9 In view of these specific public

The Merck decision addressed when claims for securities fraud under Section 10(b) of the

Plaintiffs contend that Barclays’ November 17, 2007 “trading update” was not separately and


8
Exchange Act accrue under 28 U.S.C. § 1658(b)(1), which provides that such claims must be brought no
later than “2 years after the discovery of the facts constituting the violation.” The Court emphasized this
language in rejecting the “inquiry notice” standard for which the defendant had argued, observing that
“[n]othing in the text [of the statute] suggests that the limitations period can sometimes begin before
‘discovery’ can take place.” Merck, 130 S. Ct. at 1797. Section 13, by contrast, provides that Securities
Act claims are barred “unless brought within one year after the discovery of the untrue statement or the
omission, or after such discovery should have been made by the exercise of reasonable diligence.” 15
U.S.C. § 77m (emphasis added).
9
specifically identified in the Series 4 Offering Documents and should therefore be ignored for purposes of
the Series 4 Offering. (Pls. Opp. at 8 n.5.) This argument, however, does not change the fact that the
trading update started the one-year clock running on the statute of limitations applicable to Plaintiffs’
claims. But Plaintiffs’ argument is erroneous in any event because the trading update was issued before
the Series 4 Offering and expressly stated that it was incorporated by reference into the August 31, 2007
F-3 Shelf Registration Statement, one of the Series 4 Offering Documents. (See Barclays’ Opening Br. at
7 n.5.) And even if the trading update was not part of the Series 4 Offering Documents, Barclays’ public
disclosure of the information contained in that trading update would render the omission of such
information in the Series 4 Offering Documents immaterial as a matter of law. See, e.g., Ganino v.
Citizen Utils. Co., 228 F.3d 154, 167 (2d Cir. 2000) (misrepresentation is immaterial if the information is
already known to the market); In re Livent, Inc. Noteholders Sec. Litig., 151 F. Supp. 2d 371, 441
(S.D.N.Y. 2001) (misstatements not actionable under §§ 11 and 12 where truth was disclosed).



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disclosures, a “reasonably diligent plaintiff” would in fact have discovered the information

Plaintiffs allege was actionably omitted from the Series 2, 3 and 4 Offerings, because that

information was clearly stated on the face of Barclays’ own subsequent public filings. Thus,

plaintiffs’ reliance (Pls. Opp. at 12) on Judge Rakoff’s ruling that inquiry notice was not

triggered in Merrill Lynch is inapposite here, because “virtually none of” of the public materials

cited by defendants in that case concerning mortgage-backed securities in general referenced

Merrill Lynch or the securities in question. Merrill Lynch, 2010 WL 2175875, at *2.10

III. LEAD PLAINTIFFS LACK STANDING UNDER SECTION 12(a)(2).

Plaintiffs argue that they have adequately alleged Section 12(a)(2) standing by

pleading that they “purchased the Securities pursuant to the Prospectuses,” and because their

certifications show purchases on dates near the Offerings and at the Offering prices. (Pls. Opp.

at 34.) This is insufficient as a matter of law to support Section 12(a)(2) standing. If Plaintiffs

had, in fact, purchased securities in the Offerings and from one of the Defendants—both of

which are required for standing under Section 12(a)(2)—then it would have been easy enough

for them to plead those facts in the Complaint. Their failure to do so requires dismissal of their

claims. See, e.g., Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset Acceptance

In an attempt to rescue their time-barred claims, Plaintiffs contend that Barclays’ November 2007

Corp., No. 08-10446-RGS, 2009 WL 3149775, at *4 (D. Mass. Sept. 30, 2009) (“If plaintiffs did

10
and February 2008 disclosures did not place them on notice because those disclosures were purportedly
accompanied by words of “comfort” or “reassurance.” (Pls. Opp. at 13-15.) But the purportedly
“reassuring” words Plaintiffs point to did nothing to change the concrete historical information
concerning the specific holdings in Barclays’ mortgage portfolio at the time of the Series 2, 3 and 4
Offerings. See, e.g., In re Converium Holding AG Sec. Litig., No. 04 Civ. 7897 (DLC), 2006 WL
3804619, *16-17 (S.D.N.Y. Dec. 28, 2006) (defendant’s increase of reserve charges put plaintiffs on
notice regarding claims of misstatement of reserve amounts despite management’s contemporaneous
reassurances to investors that “the company’s business remained strong”); In re JWP Inc. Sec. Litig., 928
F. Supp. 1239, 1249-50 (S.D.N.Y. 1996) (defendant’s disclosure that it was restating earnings put
plaintiffs on notice despite management’s contemporaneous assurances that the company was “well
positioned for earnings growth as the economy recovers” and that its “financial position [was] strong”).



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in fact purchase the Certificates directly from the defendants, they should have said so. An

evasive circumlocution does not suffice as a substitute.”). As Judge Stein ruled in Citigroup, to

establish Section 12(a)(2) standing, a plaintiff “must identify a particular purchase from a

particular defendant pursuant to a particular prospectus . . . . Failing to do so fails to meet even

the lessened pleading requirements of Rule 8 . . . .” 2010 WL 2772439, at *15 (citing In re

Sterling Foster & Co. Sec. Litig., 222 F. Supp. 2d 216, 246 (E.D.N.Y. 2002) (dismissing claims

for lack of standing even though plaintiffs’ dates of purchase suggested that purchases may have

been in the offering)); see also Merrill Lynch, 2010 WL 2175875, at *6 (holding that “[e]ven

under the modest requirements of Rule 8(a),” it is “insufficient to allege standing for purposes of

a Section 12(a)(2) claim” by simply asserting that plaintiffs purchased securities “pursuant

and/or traceable” to the offering documents).11

CONCLUSION

For the foregoing reasons, and for those set forth in the Barclays Defendants’

Opening Brief and in the Underwriter Defendants’ Opening and Reply Briefs, the Court should

grant the Barclays Defendants’ motion and dismiss the Consolidated Amended Complaint in its

entirety, with prejudice.




11
The Complaint also fails to establish standing with respect to any of the Series 5 claims asserted
by Lead Plaintiff Martin Ettin because his purchases were made after the public disclosure of all material
facts that he alleges were omitted from the Series 5 Offering Documents. (See Underwriter Defendants’
Reply Br. at Section III.)



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Case 1:09-cv-01989-PAC Document 50 Filed 08/03/10 Page 15 of 16





August 3, 2010

Dated: New York, New York






















Respectfully submitted,

/s/ David H. Braff
David H. Braff (DB-0761)
Michael T. Tomaino, Jr. (MT-6200)
Ryan C. Williams (RW-1275)
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, NY 10004
(212) 558-4000 (Telephone)
(212) 558-3588 (Fax)

Attorneys for the Barclays Defendants





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Case 1:09-cv-01989-PAC Document 50 Filed 08/03/10 Page 16 of 16





CERTIFICATE OF SERVICE

I hereby certify that, on August 3, 2010, I caused a true and correct copy of the

foregoing Reply Memorandum of Law in Further Support of the Barclays Defendants’ Motion to

Dismiss the Consolidated Amended Complaint to be served on all counsel of record by filing the

same with the Court’s Electronic Filing System.

___/s/ Ryan C. Williams___
Ryan C. Williams (RW-1275)