misleading is that risk management for this company was a core competency in fact it was a material witness they knew and that's not your best argument that this was a core competency issue these people could not have failed to know about this is that what you're saying but i think that what we're saying is we're saying many things but with respect to specific claim or representation that this core competency was this company's core i'm sorry all that was there  that risk management was a company's core competency the fact that they didn't have employees that were trained adequately or with sufficient experience to do risk management was indeed evidence specific allegation that core competency could not have been there a risk measure could not have been a core competency and in fact it was an admission of their own that they in fact it was i'm too weakness i'm sorry please finish what you saying saying that they admitted that that in fact was a material weakness that they didn't have the very employees necessary to do risk management is i understand what the district court said it said and let me just sort of colloquially these guys said back in whatever year they were good at what they did now we have evidence later that they're not very good at what they did but in order to make it a securities claim you must show that at the time they made those statements which are seem like opinions to me were really good at the core and management of risk they had to believe that those statements were not true and or and there's not much evidence here that shows what they knew or should have known at the time they made the statements so could you could you tell me why i can let's assume later that you've got evidence that they're not very good at risk management and they're not and they're not as competent as they said they were what's the evidence that they must have known at the time they made the statements that they weren't accurate the first point i want to address your question about are you suggesting that they may be opinion statements really well i think something like this is a core competency we're really good at risk management are are not simply are not simply factual issues now they were really good at risk management says is a compare you know when i think they sound like opinions to me they don't sound like pure facts so if they are opinions i guess my question is is there any evidence that they were that they knew that they were false when made sure they had to know and the reasons why because the reasons they said they were very good at risk management in fact it being a core competency because they analyzed every claim that came in the door and every client that claimant came into the door that they had superior access to data from insurance companies that simply wasn't available before which allowed them to to assess risk the truth was that they did not analyze every claim that came in the door in fact they ignored the biggest swath of the clients and employees that had claims with respect to the sixty six thousand employees that they acquired through the o i business they specifically admitted that they didn't look at them they didn't look at every claim in fact they when they did the due diligence on the entire business they found that the reserves had were not even up to industry standard can you go back to the statement that you think was misleading and just actually tell me the actual statement not your characterization of risk management is our core competency there were more than just one statement risk management is our core car ok now i'm talking about you we're talking about analyzing claims i'm sorry so many would think what statement you think was false or misleading there were six statements in the registration statement want to we've talked about a little bit the next statement was we analyze every claim story we can actually use the data for each claim we did that was my that was on an ongoing basis let me let me just see if i if you're thinking of a different statement than i i'm looking at one in a conference call that says we get state of the art analytics on all of our claims but that doesn't say we had allies every claim doesn't that doesn't say that we analyze every so tell me look they weren't they were not getting state of the art and i'll give but i'm the one you just said that was what i was focusing on because i couldn't find it where do you where is the statement that we analyze every claim in the registration statement you just just identify for me alas the last statement in the registration statement we left to be false we analyze claims data for each each client on an ongoing basis and above that we assess all workers compensation and medical health benefits risk on an individual client basis and uli adjust pricing to reflect their current nancy i've read that statement it doesn't say we analyze every claim it says we analyze each client and we had allies the risks of each client but  i was trying to find a statement somewhere that said we analyze every claim and i by jennifer had it in paragraph i think you were looking at it paragraph one zero eight and one zero nine but to the extent that they say that they analyze every client that i know watching a client different than analyzing a copy of this company no it's not because every every client the only claims that could arise are claims based on the clients so this company has what they call work site employees they have a couple hundred thousand of them they make their money they earn revenue on risk management for projecting to potential claims that these clients may submit so if you're going to analyze every client you must analyze every claim and in fact what they told investors was because they had  though if i can i can read it for you it's the bottom of paragraph one away page forty two we get state of the art analytics on all of our claims correct every month we're able to get claims data so we can see how our clients are performing ok i understand they made that statement that was one we've already identified can you identify a state and you may you may be right that that implies that the every claim i'm just a very specific question do they ever make a statement that we analyze every claim they make a statement i want to i want to take that and look at the complaint and yeah i  those i can find that easily implication you know are the implication from the quote that i just read to you is that they analyze claims data on every claim and they in fact were not but that's an implication we're both looking for the actual language and whereabouts in the registration statement and can you give us that please the registration statement says we analyze claims data for each client on an ongoing basis and that means that when i've had eyes ok but that doesn't say we look at each and every claim for every client as that's specific statement doesn't say that but we're going to does that statement appear in the registrations that statement that specific statement is not in the registration statement ok as it is somewhere else that you referred to in the medical plane it is i believe that it is your honor and i want to take when i come back on rebuttal i will address it very specifically for you very well but the statements that the company made were that we we have access to data that wasn't available prior to the subsequent statement that you say shows the previous one was false right that's exactly that's exactly right that and they simply didn't have it they in fact admit that they weren't getting data on every claim and in fact it was the they were only even asking for data over three hundred thousand dollars from the insurance companies when the problems that arose were for data that was for claims that were under three thousand three hundred thousand dollars thousand out of the problem and of your complaint that they are said they're going to examine everything every little thing no exceptions but in fact they didn't examine everything with them and some things but not everything therefore they lied is that basically what you know i think they gave the impression that because risk management was the best thing that they do  and the only thing that they do in which they make money that because they were so good at it and that they could access and analyze every claim or almost every claim and every client that came into the door that the knowledge you don't have to work in their reclaim in order to do a really good job if you're doing your job i wouldn't know the answer to that question because this company said suggested that they look at every claim and even if you don't look at every claim that's just take for instance what what they said about the sixty six thousand employees that they didn't look at at all and so to the extent that they didn't look at them at all and ultimately found and admitted to investors that they should have done that their due diligence and in fact their due diligence didn't meet industry standards ultimately that resulted in significant losses and they admitted that that reserve reserved for those claims and if this were  derivatives those would be great claims my question is why do they demonstrate that the statements were made were false well it's not a derivatives suit that's right the expectation and and the impression that they gave to investors with respect to their ability to do risk management and assess claims at a level that no other company could do before that the expectation that you know you're not but now you're now you're going to be careful you're you're you're going past what they said they didn't say we can do this better than any other company could ever do before you're now implying from stuff my question is you'll find out a year later six months later that they're not very good at what they do so my question is how does that lead me to know how does and why does that make it plausible that they were lying when they told you they were very good at what they do don't know it to be sure that i have time for for rebuttal why it was why i don't want you t people one of you got thirteen minutes and the next to have one minute you know that won't work yes your honor i'm speaking for all minutes with respect to the common defense my co counsel are speaking about the individual defense is that the underwriters and control if they're going to each with respect if they're each going to take a minute to speak about their individual defenses i can't imagine that they're going to hit anything to what we have in the briefs i'm sure that your honour's did not think that they were waving them by not speaking and if we stipulated that advance would they be happy and i don't know what what everyone what i need to do to bill the clients as well but the bottom line is that the the bottom line is that we just know from our experience that one minute it's going to use up the time what it boils down to but will try to give it a shot so will tell you when the time is coming this is a classic case of fraud by hindsight that the plaintiffs are relying on optimistic statements that were made in the registration statement airing them to statements that were made later when things didn't turn out quite as rosalie's as hoped and saying that shows that there was fraud in this case this court's cases the supreme court cases make clear that that is not adequate i want to talk about the specific arguments that my friend has made and why those are not supported because as the court has indicated in many instances liberties with what is is making characterizations of what is said in this court made clear in the deer born case your honor judge smith the plaintiff's conclusions are not facts so we have to look at the facts and in this case there is no confidential informant no confidential witness there is no allegation of fact other than the words in black and white that were spoken by us and recorded in transcripts can you know just zero in on the statement that i have down in my notes but i think you're going to tell us is one of these kind of characterizations but i have that they you all represented that you received the claims down for every client is that you're saying that that's not something you ever said but we did say that we clarified though because there is  a gross confusion on the part of plaintiffs with respect to who the client is the client is the company the co employer the ws or the employees who are cohen employed by trying that and the co employer the client and that is really reflected on s c r one o one which is the principal statement of the registration statement from what all of which these statements are drawn because it says that  we take care one of the ways in which we conduct risk management is by being very careful in the quote businesses we take on his clients it's the businesses that are our clients and so when we said as we did in the quote your honor just pointed to that we received claims that a for all of our clients it's the client it's the coen employer so whom we receive claims that it does not mean we receive every little bit of data ok what were the true facts that came out course because what was stated in these statements about the three hundred thousand versus fifty thousand limit s c r to forty seven to forty eight and what we said was historically we've asked  carrier for information on kastrup it claims over three hundred that could potentially be in their pipeline so we're looking at asking for a different category of data than actual claims this is for these big potentially catastrophic claims we want you to give us some some foresight what do you see coming down the road right and so now we ask them to tell us for any claim that they expect to be greater than fifty thousand on a monthly basis so that we can track those through our pipeline there's a potential claim for fifty thousand here's the diagnostic code here's the potential length of stay so this will allow us to align the potential with details every single bill and you know submitted by anybody give me the analytics so we're getting our legs for you know on the data that doesn't suggest that we're looking at every little tittle and when we say that we get claims that for each client it doesn't mean we get every little bit of data for every client we get the claims if it's really like that every little bit it probably would let's assume that subsequent facts show that maybe your analytics weren't state of the art in two thousand and fourteen i don't think they do i think what one of the allegations it made is that we made representations that we were getting better data than was available to competitors three and four years before but what you will not find in the complaint is in the allegation of what data was available to those competitors three and four years to go before by which you could compare them and whether we were receiving the same thing again there's no allegation even about what we were actually receiving so that this is mere speculation that that was not accurate so let me ask about another statement because this is this is one i don't understand so you have to help me with at some point this is about aggregate stop loss and i'm not sure i understand the difference between aggregate stop loss and stop loss you there is a representation that we typically get stop loss on an aggregate basis and then there's a later call in which somebody on your side says well it's not aggregate stop losses no it's cost effective so we don't we don't  how do these square those two well your honor this is the most curious thing i think about the complaint this is the allegation that the plaintiff makes by inserting brackets in what we actually said that says but did not this is the first forty to forty there was a the question was in a sense what more could you do to cap the losses right and mr porter says i think this is a quote  we've also we also can do aggregate stop loss but again when you look at the cost isn't really out weighing the benefit of doing that well but the question was what more could you write ok and i understand sample one of the things in the question was could you do stop loss on a regional basis there was never any assertion that we did stop loss on a regional now let me let me focus on i understand your point we focus on what what what's concerning me the disclosure say is we typically include limits to our maximum aggregate exposure for claims in a given policy here and mr porter says we can do aggregate stop loss we could in response to the question but it it the cost really doesn't have way the benefit of doing it does it doesn't that suggest that the initial statement might not be accurate and i want to point out because i think this is very significant in the fiscal year fifteen ten k which in which plaintiff says everything came clean finally and we saw the truth the exact same language that your honor quoted about we typically included term limits our aggregate total loss and called stop loss that's in the ten right now no see i don't understand you've said it you say repeatedly we typically do that my question is why doesn't mr porter statement in two thousand and fifteen which says and maybe i don't understand what aggregate stop loss is but it says we also can do stop loss but when you look at that the cost isn't really about weighing the benefit of doing it is that a statement that we aren't doing it or that we're doing it but it's not cost effective i can't i don't know what that statement and i would think that they would have to allege something clearer that show that we weren't doing what we said we were doing well but isn't it because it was in response to a question about this when i get back to your point there was a response to a question about what more could you do but and then he says we could do this but the cost  weigh the benefit isn't that a statement that we're not doing it now not a statement that we're not doing it's a statement that we're not going to do more of it we're not going to do it on a regional basis which we never said we were doing we're not going to do to reduce the  stop loss limit it's below that and because there's a discussion immediately for that about whether you're going to reduce the workers comp or rather the perk claim limit from a million dollars to lower than that at some point if you're not taking on any of the risk you don't get any of the benefit is what he's saying so we're not going to do more in the very can a list the plaintiffs cites as evidence of what was understood about this and this is at  their quote is at the heart when fifty nine paragraph one twenty one says that if that company had showed no intent to further limit the likelihood of losses so they understood it was that we weren't going to do  of this than we already were and again in the ten k at the end of twenty fifty i don't think it's our representation of total stop loss was being done to question is whether any whether aggregate stop loss was being done either we were going to do more of that on a regional basis or other types that we weren't already doing it at some point if you're not taking on any risk you don't get any of the benefit in the us what is to say in the correct that i mean the reality here you are having discussion of analytic tools available to accompany the did what this company did and sometimes you get one thing sometimes you use another thing it just depends what seems to be best under the circumstances something may work in one industry on another but the fact that somebody does or doesn't use a particular stop loss in a particular situation does not mean does it that the company is grossly negligent it simply means that using you've got a whole battery of tools are going to use this one i'm going to use that one but i may be not going to use this one today you're right you're right what it what it had a bit lee does not say is what they impute to us by the brackets it does not say that we don't do stop loss can i ask you did to go back to the we  get state of the art analytics on all of our claims that statement so what's the difference between claims data and and state of the art analytics that because the first question the first time i asked you about you said oh no we just said we get stuff about the client this statement obviously is focused on claims so what's the difference one of the analytics is going to be an assessment it's going to be is your run rate higher than normal are you spirit in seeing spikes in certain areas and other areas i mean i compare it to the information we get on a monthly basis in the law firm that tell us sort of like what practice groups are busy or not busy but it's not telling me what every associates you know the time entries are that would be too much information i couldn't and wouldn't be valuable to me but the analytics that rolls it up and gives me some a sense of what's going on what the trends are is this more or less than is expected expected in the same quarter in past years that's up and i want to go back to the risk management as a core competency this i mean i think that it's even more than opinion it's puffery and not actionable for that basis but at the very most it's an opinion and they haven't established that we didn't believe it at the time all they're able to point to is that at the end of the period in with respect to the internal controls for financial reporting there were weaknesses but with respect to internal controls for financial reporting in the registration statement it is explicit that we had not done that that our that our auditors had not looked at that for us and that they had they may well have found material weaknesses and risk management of course means a lot more it means twenty five years of experience in the industry it means being selective in the kind of clients we take on we take on white collar clients primarily some blue and gray but not the hard labor we we have a risk mitigation procedure so there was a lot in that but it's not disproved by the fact that after these three blips after we know these problems we recognize those problems and staying we have some material weaknesses and we are addressing them by adding  additional people to our staff not that we had no staff to begin with thank your honor and one of the both of you come up because you've got a minute and sixteen seconds and you can each take turns and you will have done your duty to your clients we know reason the court does address that i just want to point out i just got a control person what i believe the first time she did not get a correct the second time the first time around she correctly applied the standard in this circuit which is actually pretty in the wrong doing you have an intermediate standard that's very clear that requires some type of specific factual allegations showing either person were asking to be held or drill person off in the day to day affairs respect to the risk management shuts of the amended complaint right it is your honor here's what they're asked and before we move on off of the wrist thing the industry i guess is a bit littered with companies that have blown up in one way or another because over the years because of poor risk management can you describe like how does the investor base get confidence that china is different and the answer is the key to the risk the risk of the business is the data the entire impression that was given to investors was because they had the data the experience the people and the competency that the risks and the factors that caused the losses here simply would not happen with respect to what analytics are as compared to data data and analytics when i looked it up are the same thing that and that's exactly what they intended to impress a lot of them are what you do with data i'm sorry analytics is what you do with data that's right but they weren't getting the data up the same and they weren't getting the data need met they weren't getting the data and today they expect to explain to this court why what analytics mean that's for that's for the trial cour do the analytics on the data which i think they said they were getting it and that's my question were they get where were they getting it from you know what they said was that they were getting it from the from the insurance carriers but later they said that they weren't getting it from the insurance carriers and