may please the court daniela quit for plaintiffs elements in granting defendants motion to dismiss plaintiff's arista claims that the pleading stage the corporal o did not have the benefit of this court's decision in jantar versus the retirement plan of i b m which was issued after we had filed our opening brief gender makes several points which are highly relevant and would support reversal by this court or be a basis for reconsideration by the court below need not fear in irrational overreaction to the disclosure of fraud the corporate low made a factual finding that notwithstanding the very small amount that the plan held during the relevant period which was zero point zero three percent and the fact that many of the funds were selling the stock in the one million the stirring the relevant period the corporal oh hell that any disclosure quote would have prompted a negative market reaction on a scale beyond the mathematical proportion of the plans holding standing alone and what i think small percentage of the staff but you're talking about all the insiders unloaded right well the funds i think they dumped like twenty five million what we're saying is that this court says you don't presume that there's an overreaction and we're saying this court's decision is consistent with th rd remembering that th rd versus didn't ha st said listen plaintiffs we're not saying there isn't there is a presumption what we're saying is the market absorbs all the information now why is this case a little bit different than some of the other cases and why is it more like gender because we say that what what happened there everything was going to come out you can't hide the fact that there were these loans with big investment bankers that they couldn't pay at the start of the class period they announced a two billion two hundred million dollars transaction which the market immediately reacted negatively the very next month under the under the helm of mr who was who was on the investment committee they took out a loan with goldman at a commercial effective rate of fifteen percent compared to what would have been five percent had they been in a better financial position now the terms of that loan are not disclosed now m it it's not disclosed tell november it's months later the your principal a suggesting here and i realize you have other arguments but i'm trying to figure out what ones you're you're really relying on  saying this is a case where it's because of the inside information that the trustees were in were required to act and what you've said so far is that the action they should have taken is to disclose the inside information that they knew yes they should have disclosed the information they knew about the loans and the loans what's also important is these loan were originally classified as  recourse loans meaning they were going against the value of the stock ultimately which is why i think it's like jantar and it's inevitable in november or months later this information all came out you can't when you're when you're borrowing money from peter to pay paul you can't keep it a secret they went so far as to raid their own yield companies to get money to make these payments mr woolsey himself was the person arranged the wire from the young company back to sun edison they couldn't make these payments this information was coming out in drips and drabs so yes we're saying predominantly this insi should have been closed down or that they should have sold their stock from that out of that fund not at the very beginning no what we're saying is the insider had information that was available to him in july and august but by the time the fall comes along october november when all the financial press is saying oh did you hear we heard about the goldman won't they disclose the company disclose itself in november the committee still didn't do anything with this company what they argued in essence in this brief was not only did the insiders not do anything but nobody had to do anything that was a public asset and therefore they could sit back well let the chips fall and whatever happens happens that's what they did here well that's a that's a separate set of questions that maybe we'll get to later but to get back to the insiders does this mean in effect that any public company that has an employee stock ownership plan as an option in its rissa program is affected really subject to greater obligations to make public disclosures then would be the case under the securities laws in other words that i take it it's a premise of this whole discussion and that these insiders were not under an obligation under the securities laws in general to notify the investing public that this company is going south in between whatever financial statements were regularly do but effectively they are under such an obligation to their employee participants which effectively becomes an obligation to the general public i think it's the latter because what happened here is this isn't something where something just happened overnight they knew and certainly the insiders  knew already in july and august they knew that they didn't have the money to make these payments and so maybe they don't have to disclose the demise of the company which is what the defendant said that we were saying but they do have to disclose the true terms of all these agreements which is something that in each stage they withheld things for several months which they could have disclosed and to answer the other part of your question we're saying i'm actually saying that it's a two part the insiders  obligation early on but at some point here the rest of the committee who had access to information this isn't like lehman brothers where where the court for this court said any investigation here wouldn't have plan that was created says that they don't have that option that they can't the investment committee reserves the right to change any investment options provided that it has no power to provision a plan that says they can all only invest in the stock and except for such cash as is necessary to meet liquidity so help me out with that that's what everybody knew going into the site and put some of their money into this plan but they could have frozen it they could have arranged i just want to if i could answer your question they they could have done something because for here at least under the facts of this case because i think in some cases you just simply don't have enough time to do anything but in this case they had the ability to freeze it we we listed several options that they could have done but the problem is even just reading the newspaper articles and the fact is what shows that this information was going to come out they themselves disclosed it they went into bankruptcy court and they said you know this was a problem it was a year in the making the handwriting was on the wall they argued in the securities case before the same judge i'll be it after he decided our case they argued at points in time where the class period should end because all the information they argued was in the marketplace so what they in effect said was that the public should a gnome everyone should have known except the people on the investment many that that turns trust law on its head that basically says if there's a market price we just sit back we don't do anything and whatever happens because we're handcuffed that's not what th cert th rd held in fact damage and said freezing the plan might be a possibility that satisfies th rd but we can't tell on this complaint and it remained it that's what we're saying here with the information off the nd circuit's decision in jantar and going back to what th rd really says that the  court decision needs to be revisited because otherwise you're saying that it's a publicly traded security and at the pleading stage with all the constituent facts that we argued that's it game over on your hands is correct the time the district court decided this case it did not have the benefit of the chandra decision but it did have the benefit of the supreme court's decision and didn't offer and this court's decision and rinehart and the district co offer in this case and that is why you should affirm there were two claims in this case one was a public information claim that the fiduciary should have known from publicly available information that the company's stock fund was imprudent there was a separate claim that there was insider information from nonpublic information they should have done something with respect to the stock chander does not address the public information claim that was a focus in the district court of the plaintiffs this case the case that is on all fours with this one is the reinhart decision this court's decision in rinehart and it said as did the supreme court that public information claims or claims that fiduciary should have figured out that stock is imprudent soley from available public information ours are implausible as a general matter absent special circumstances you hear in this case you have the same sort of public information the plans were relying on exactly the same sort of public information that you had in rinehart it was newspaper articles analysts say different things volatility the stock price there was absolutely factually no difference in the public information arena between this case and between rinehart and so the court was correct to dismiss the public information claim there was also no plausible claim with special circumstances two points about that one is that in special circumstances in the district court the plane back i mean if i went to this and look for long term investments and he said well at the time that this was going on you should put your money into sun edison because i know this has been going down down down down but the price is now pretty cheap and so there's a huge upside potential to this would it not be appropriate to question that as an imprudent investment just because a high risk investment might have a big upside but it also has the possibility you will lose every dollar you put in and that's not the way you know in other words is it it can be a perfectly appropriate market price that ten dollars a share at this moment in time is exactly what the market thinks it's worth taking into account the upside potential in the downside risk but that isn't that would know your investor is all about what you know what different investment goals would investor this is a plan with thousands of investors and they're not all conservative there are not all judge lynch and so some of them are going to want to take a more aggressive stance as this plan had a number of investment options this wasn't the only one it was a four hundred and one dollars k were participants could self their cash each each employee reach participant in the plan gets to say i'm going to put all my chips in this one i'm going to put a very small portion in this want to have some other things that are more prudent but if this is a lot of money i know this is risky but i'm to put my money into it and so what you want is a menu of options that span the risk reward spectrum and there's nothing wrong with having a risky option but to answer your nd that's the nd part of your question judge that's exactly what this court grappled with in rinehart the question was is it ok to have something that's risky can you have a public information claim that's based soley on well i think this was too risky for a for a one k plan that's the question that the supreme court answered and didn't offer and said no and the question this court answered squarely and i heard said no so i don't think you can you can't have an imprudence claim that says i'm going to look around the public information decide this is too risky for a four or one k plan that's exactly the claim that was a limb unaided but let's talk for a minute if i can about the insider information claim that janet yeah so gender so this case isn't chander and let me explain to you why so the facts of gender are roughly the following i b m was going to sell a division that at least it was  alleged was overvalued and it knew it was going to sell a division that was going to sell the division shortly and there was also allegations not present in this case that by making the disclosure earlier that there was going to be a smaller price impact than if they made the disclosure later ok so a couple things about this st disclosure here was inevitable the claim that this company the idea that this company was insolvent ahead of her bankruptcy there was no way that that was a known fact at the beginning of the class period that was inevitable in the way that the sale of the janitor division which everybody knew was going to take place was inevitable the nd thing though and the court specifically this court specifically said in that that was an important fact that because it was inevitable that it should have been disclosed earlier but the nd point that makes this case different than janitor is in g enter the argument the plaintiffs were making is that there was going to be  reputational damage to the management if they didn't make the disclosure earlier but if what the plaintiffs are saying and we think that's a fair reading of their complaint is this company was insolvent one of the class period there wasn't going to be perfectly reasonable that the producers would say to themselves you know what even if they thought the company was insolvent let's just assume that for a minute maybe will beat this thing maybe the market will turn back but to say something that's going to kill the company  dollars is sealing the stock right down zero and it's going to take the stock right down to zero right now so this isn't gender where the stock would have gone down ten dollars if you had disclosed vontae one but fifteen dollars if you disclose that much later in time this was stock going down in the one hundred percent now or a one hundred percent later according to the plaintiffs and so we're not in the janitor scenario and the other thing that i would caution is you know the supreme court in didn't hopper was trying to find a way at the motion to dismiss stage to cut down on those lawsuits if you use the janitor if you take seriously the notion well and disclosure that's inevitable means that plaintiff states a claim every disclosure you could always point to some  event and say well it was inevitable it was going to come out because of x or y event if an editable disclosure is the new standard and didn't hopper is meaningless because every every complaint that's brought is going to state a claim there's not going to be any separating out meritless goats from the plausible sheep or whatever turn of phrase the supreme court has so gendered can't mean that any time disclosure is quote inevitable for reasons we can drum up that the stock is somehow improved let me ask you about that you just said that gender is distinguishable because the disclosure here would have resulted in the inevitable demise of the company and my question is how do we know that that's what the plaintiffs are pleading that's that's what was in their complaint saw if you look at a couple of paragraphs judge in particular i would point you to one hundred and seventy eight and one hundred and twenty three but the plaintiffs were essentially saying that if they said and they said this repeatedly in their briefs in this court they said this company was hopelessly insolvent so from day one this company was insolvent if you made disclosures the market would have known this company was insolvent so if this company is truly insolvent judge kogan what's going to happen is the market's going to process that information stock is going to go to zero that's how we know that that's what the plaintiffs are pleading that's their entire theory of this particular complaint so so there so the to do serious here if you apply the more harm than good standard what the standard says is could a fiduciary have determined that making an earlier disclosure would do more harm than good could have reasonably determined that and it's in spades in this case it's painfully obvious and this is what the district judge was saying it's painfully obvious that it district to do surely in the position of sun madison could decide that this was not a disclosure that was going to do more harm than good what's going to happen is what judge lawyer mentioned which is the stock is going to go to zero if we may these the slaughter is so let's see if we can beat this thing let's see if we can do better even if you assume and again there's no reason to really believe this but even if you assume the producer is new and thought this company was insolvent saying it on day one wasn't going to help anybody it was only going to hurt the participants in the sun and stock fund who already held the shares so we we i want to address the last point st even though i want to also respond to one of the questions and judge lynch posts from my adversary we don't allege that the stock would have gone to zero in fact all of the things that i told you that should have been disclosed earlier about the proper classification of the loan and the real terms the company disclosed in november the stock didn't go to zero it went to three or four dollars that's what the complaint says it's defendants analysis of our complaint that says that we said that they had to disclose bankruptcy that it would go on to zero but it is inevitable if you take out a loan with a large bank like goldman and you lie about the terms it's the same thing as if you have a gap violation in a subsidiary that you're trying to sell eventually people are going to find out that you don't have the money to pay that's what they said they want to have a both ways they want to cut the class period they want to get debtor in possession we did we did everything we can we didn't say that they had to disclose all of that when they said we said you had to tell the truth and you had to tell it contemporaneously they waited six months to tell there was any number of times it was an eight month period november was six months before they announced bankruptcy they didn't do anything they defray the plan when there was a department of justice investigation and the other point is prudence does not equal the fair market price the whole point of all of these cases that have said that risk includes is reflected in the price sometimes something could be imprudent because of the way the company is headed it doesn't we don't have to presume it'll go to zero for it to be imprudent of the point of that logic but how is that consistent with rinehart because in rinehart this court held for one thing that it was a matter of days where the company fell apart the plaintiffs relied on s c c orders which said something might happen regarding i can't remember the specifics but it was something that was not a certainty that was going to happen the fact that they didn't have the money to pay these margin loans or that they were borrowing money at these ridiculously commercial rates that they have to go to their own meal companies disband them something called the friday night massacre they put themselves in there wasn't mr who negotiated the loan he was the one who did the wires from the yield company this was in december the company filed for bankruptcy in april there is a lot of time for both the insiders and the other committee members to have done something because they really can't have it both ways if you say the market which is what  yes in the context of inside information but we don't have to presume that there is going to be an overreaction the purpose of all of the th rd we have market efficiency market efficiency isn't just one factor it's a lot of factors it's  how many shares are involved and in order to reach this the decision that our judge read he had to disregard every other factor and every other allegation and he seized on that one and thank you very much