Lead Plaintiff's Memorandum of Law in Opposition to Defendants'

POINT I
THE COMPLAINT STATES CLAIMS UNDER
SECTIONS 11 AND 12(a)(2) OF THE SECURITIES ACT
Under Section 11 of the Securities Act, purchasers of registered securities may sue an issuer,
its directors, every underwriter of such security, and any person who signs the corresponding
registration statement, if the registration statement contains a material misstatement or omission. See 15
U.S.C. § 77k(a); Milman v. Box Hill Sys. Corp., 72 F. Supp. 2d 220, 227-28 (S.D.N.Y. 1999).
Section 12(a)(2) of the Securities Act imposes liability upon any person who offers or sells a security
by means of a prospectus that contains a material misstatement or omission. See 15 U.S.C. §
77l(a)(2); Milman, 72 F. Supp. 2d at 228. Scienter is not an element of a Section 11 or Section
12(a)(2) claim. See Herman & MacLean v. Huddleston, 459 U.S. 375, 382 (1983) (holding that the
pleading burden for such claims is “relatively minimal” and that “[i]f a plaintiff purchased a security
pursuant to a registration statement, he need only show a material misstatement or omission to establish
his prima facie case”). In this case, no one disputes that the registration statements and prospectuses
issued in connection with the May 2000 and May 2001 Offerings contained untrue statements of
material fact and omitted to state material facts required to be stated therein or necessary to make the
statements therein not misleading.
The Complaint names the following as having violated Section 11 with respect to the Offerings:
the Director Defendants and Ebbers, each of whom signed the registration statements (Count I);
Andersen, which authorized the incorporation of its audit opinions into the registration statements
(Count III); and the Underwriter Defendants, each of whom underwrote one or both of the Offerings
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