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

Offering, HGK purchased over fifty percent of its Notes in the May 2000 and May 2001 Offerings,
and FCERA purchased over $3 million of its Notes in the May 2001 Offering, there can be no dispute
that each of the Named Plaintiffs has standing to assert claims arising under Section 11 and Section
12(a)(2). See, e.g., In re Ultrafem Sec. Litig., 91 F. Supp. 2d 678, 694 (S.D.N.Y. 2000) (plaintiffs
who purchased shares in the Offering have standing pursuant to Section 12(a)(2). 14
2. Named Plaintiffs Have Standing to Assert Section 11 Claims on Behalf of
After-Market Purchasers
The Underwriter Defendants’ argument that secondary market purchasers have no standing to
sue under Section 11 fares no better.
The Underwriter Defendants rely on a single decision from this Circuit, In re WRT Energy Sec.
Litig., Nos. 96 Civ. 3610 (JFK), 96 Civ 3611 (JFK), 1997 WL 576023 (S.D.N.Y. Sep. 15, 1997)
(Keenan, J.), appeal pending, No. 02-7829 (2d Cir., filed Sep. 25, 2002), and several district court
cases from other jurisdictions. Underwriters Br. at 17. Since WRT was decided, however, every
judge in this District who has considered this issue has held that secondary market purchasers have
standing to assert Section 11 claims. 15
14
The fact that FCERA and HGK also acquired Notes in the secondary market does not
deprive them of standing to assert claims arising under the Securities Act. See In re Ultrafem Sec.
Litig., 91 F. Supp. 2d at 694 (plaintiffs who alleged that they purchased Ultrafem shares “pursuant to
the Offering and in the after-market during the Class Period” have standing under Section 12(a)(2)
because they purchased shares in the offering); see also In re Am. Bank Note Holographics Sec. Litig.,
93 F. Supp. 2d 424, 436 (S.D.N.Y. 2000) (McMahon, J.) (“Because the co-lead Plaintiffs group
includes those who purchased their shares directly in the IPO, the class has Section 11 standing as well
as Section 12(a)(2) standing. It is therefore unnecessary to decide here whether those Plaintiffs who
can ‘trace’ their purchases to the IPO have standing under Section 11.”).
15
See In re Turkcell Iletisim Hizmetler, A.S. Sec. Litig., 209 F.R.D. 353, 358 (S.D.N.Y.
2002) (Buchwald, J.); In re AMF Bowling Sec. Litig., 2002 U.S. Dist. LEXIS 4949 (S.D.N.Y. 2002)
(Chin, J.); In re Sterling Foster & Co. Sec. Litig., 222 F. Supp. 2d 216, 246 (S.D.N.Y. 2002) (Spatt,
J.); Dorchester Investors v. Peak Trends Trust, 2002 U.S. Dist. LEXIS 3067, at *19 (S.D.N.Y. Feb.
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