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CHRISTIAN v. BT GROUP PLC et al, Docket No. 2_17-cv-00497 (D.N.J. Jan 25, 2017), Court Docket

                                         Multiple Documents
Part                Description
1                   3 pages
2                   Brief
3                   Text of Proposed Order

                                      © 2019 The Bureau of National Affairs, Inc. All Rights Reserved. Terms of Service
                                                                                                             // PAGE 1
Case 2:17-cv-00497-KM-JBC Document 68 Filed 10/04/19 Page 1 of 3 PageID: 1604

OF COUNSEL:                                Kevin H. Marino, Esq.
James P. Rouhandeh, Esq. (pro hac vice)    John D. Tortorella, Esq.
Brian S. Weinstein, Esq. (pro hac vice)    MARINO, TORTORELLA &
DAVIS POLK & WARDWELL LLP                  BOYLE, P.C.
450 Lexington Avenue                       437 Southern Boulevard
New York, New York 10017                   Chatham, New Jersey 07928-1488
Tel.: (212) 450-4000                       Tel.: (973) 824-9300
Fax: (212) 701-5800                        Fax: (973) 824-8425

                                           Attorneys for Defendants BT Group plc,
                                           Ian Livingston, Gavin E. Patterson,
                                           Tony Chanmugam, Nick Rose, Luis
                                           Alvarez, and Richard Cameron

                 UNITED STATES DISTRICT COURT
                    DISTRICT OF NEW JERSEY

JAMES CHRISTIAN, Individually and on            No. 2:17-cv-00497-KM-JBC
Behalf of All Others Similarly Situated,
                                                CLASS ACTION
                        Plaintiff,
                                                ORAL ARGUMENT
                  v.                            REQUESTED

BT GROUP PLC, IAN LIVINGSTON,                   RETURN DATE:
GAVIN E. PATTERSON, TONY                        JANUARY 6, 2020
CHANMUGAM, NICK ROSE, LUIS
ALVAREZ, and RICHARD CAMERON,                   NOTICE OF MOTION TO
                                                      DISMISS
                        Defendants.

To:   James E. Cecchi
      CARELLA, BYRNE, CECCHI,
      OLSTEIN, BRODY & AGNELLO, P.C.
      5 Becker Farm Road
      Roseland, NJ 07068

      Samuel H. Rudman
      David A. Rosenfeld
Case 2:17-cv-00497-KM-JBC Document 68 Filed 10/04/19 Page 2 of 3 PageID: 1605

      Alan I. Ellman
      ROBBINS GELLER RUDMAN &
      DOWD LLP
      58 South Service Road, Suite 200
      Melville, NY 11747

      Corey D. Holzer
      Marshall P. Dees
      HOLZER & HOLZER, LLC
      200 Ashford Center North, Suite 300
      Atlanta, GA 30338

      Attorneys for Plaintiffs

      PLEASE TAKE NOTICE that at 9:00 a.m. on January 6, 2020, or such

other time and date as set by the Court, Defendants BT Group plc, Ian Livingston,

Gavin E. Patterson, Tony Chanmugam, Nick Rose, Luis Alvarez, and Richard

Cameron will move before the Honorable Kevin McNulty, Judge of the United

States District Court for the District of New Jersey, Martin Luther King Building

& U.S. Courthouse, 50 Walnut Street, Newark, New Jersey, for entry of an Order

granting Defendants’ Motion to Dismiss Plaintiffs’ Fourth Amended Complaint.

      PLEASE TAKE FURTHER NOTICE that, in support of the within

motion, Defendants rely upon the accompanying memorandum of law and the

Declaration of James P. Rouhandeh.

      PLEASE TAKE FURTHER NOTICE that a proposed form of Order is

being submitted herewith.

                                         2
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      PLEASE TAKE FURTHER NOTICE that, pursuant to Local Civil Rule

78.1(b), Defendants request oral argument on this motion.

Dated: October 4, 2019                   By: _________________________
                                         Kevin H. Marino, Esq.
                                         MARINO, TORTORELLA
                                         & BOYLE, P.C.
                                         437 Southern Boulevard
                                         Chatham, New Jersey 07928-1488

                                            Attorneys for Defendants BT Group plc,
                                            Ian Livingston, Gavin E. Patterson,
                                            Tony Chanmugam, Nick Rose, Luis
                                            Alvarez, and Richard Cameron

                                        3
Case 2:17-cv-00497-KM-JBC Document 68-1 Filed 10/04/19 Page 1 of 48 PageID: 1607

                    UNITED STATES DISTRICT COURT
                       DISTRICT OF NEW JERSEY

  JAMES CHRISTIAN, Individually and on            No. 2:17-cv-00497-KM-JBC
  Behalf of All Others Similarly Situated,
                                                  CLASS ACTION
                          Plaintiff,
                                                  ORAL ARGUMENT
                    v.                            REQUESTED

  BT GROUP PLC, IAN LIVINGSTON,                   RETURN DATE:
  GAVIN E. PATTERSON, TONY                        JANUARY 6, 2020
  CHANMUGAM, NICK ROSE, LUIS
  ALVAREZ, and RICHARD CAMERON,

                          Defendants.

      MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’
  MOTION TO DISMISS PLAINTIFFS’ FOURTH AMENDED COMPLAINT

  OF COUNSEL:

  James P. Rouhandeh, Esq. (pro hac vice)    Kevin H. Marino, Esq.
  Brian S. Weinstein, Esq. (pro hac vice)    John D. Tortorella, Esq.

  DAVIS POLK & WARDWELL LLP                  MARINO, TORTORELLA
  450 Lexington Avenue                       & BOYLE, P.C.
  New York, New York 10017                   437 Southern Boulevard
  Tel.: (212) 450-4000                       Chatham, New Jersey 07928-1488
  Fax: (212) 701-5800                        Tel.: (973) 824-9300
                                             Fax: (973) 824-8425

                                             Attorneys for Defendants BT Group plc,
                                             Ian Livingston, Gavin E. Patterson,
                                             Tony Chanmugam, Nick Rose, Luis
                                             Alvarez, and Richard Cameron
Case 2:17-cv-00497-KM-JBC Document 68-1 Filed 10/04/19 Page 2 of 48 PageID: 1608

                                          TABLE OF CONTENTS
                                                                                                                  PAGE

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

 STATEMENT OF FACTS .........................................................................................4
 I.       Background ......................................................................................................4
 II.      Procedural History and the Court’s Decision to Dismiss Plaintiffs’
          First Amended Complaint ................................................................................ 6
 III.     Plaintiffs’ Second, Third, and Fourth Amended Complaints .......................... 9
 LEGAL STANDARDS ............................................................................................12
 ARGUMENT ...........................................................................................................13
 I.       Plaintiffs Fail to Plead Particularized Facts Giving Rise to a Strong
          Inference of Scienter Required for a Section 10(b) Claim ............................13

          A.       Plaintiffs Fail to Plead Facts Supporting a Strong Inference of
                   Scienter Regarding the Individual Defendants ...................................14
                   1.       Allegations of “Bullying” at BT Italy Are Not New and
                            Do Not Support a Strong Inference of Scienter ........................14
                   2.       “Must Have Known” Allegations from Anonymous BT
                            Italy Sources in a Newspaper Article Are Legally
                            Insufficient to Plead Scienter ....................................................16
                   3.       Statements Attributed to BT Italy’s Former CEO and
                            CFO in Newspaper Articles Are Not New Allegations,
                            and Are Legally Insufficient to Plead Scienter .........................19
                   4.       Allegations Regarding the Italian Government’s
                            Investigation and KPMG Report Contained in News
                            Articles Are Legally Insufficient to Plead Scienter .................. 22
                   5.       Plaintiffs’ Ancillary Scienter Allegations Relating to
                            Chanmugam and Alvarez Also Fail ..........................................27
                   6.       Plaintiffs Make No New Scienter Allegations Against
                            Livingston or Patterson, and Plaintiffs’ Scienter
                            Allegations Against the Remaining Individuals Fail ................ 30

                                                             i
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          B.      Plaintiffs Fail to Plead Corporate Scienter ..........................................32
                  1.       The Third Circuit Has Not Adopted the Corporate
                           Scienter Doctrine.......................................................................32
                  2.       Even if the Corporate Scienter Doctrine Could Apply,
                           Plaintiffs’ Allegations Do Not Give Rise to a Strong
                           Inference of Scienter as to BT Group .......................................34
                           (a)       Plaintiffs’ Cavestany Allegations Do Not Give
                                     Rise to a Strong Inference of Scienter ............................34
                           (b)       Plaintiffs’ Alvarez and Cameron Allegations Do
                                     Not Give Rise to a Strong Inference of Scienter ............ 37
 II.     Plaintiffs Fail to Allege that Alvarez and Cameron Made or
         Disseminated Misstatements .........................................................................38

 III.    Plaintiffs Fail to Plead a Section 20(a) Claim ...............................................39
 IV.     Plaintiffs Should Not Be Granted Leave to File Another Amended
         Complaint ......................................................................................................39

 CONCLUSION ........................................................................................................40

                                                            ii
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                                      TABLE OF AUTHORITIES

                                                      CASES

                                                                                                          PAGE(S)

 In re Advanta Corp. Sec. Litig.,
     180 F.3d 525 (3d Cir. 1999) ..........................................................................17, 30

 In re Alpharma Inc. Sec. Litig.,
     372 F.3d 137 (3d Cir. 2004) ....................................................................35, 36, 37

 Ashcroft v. Iqbal,
    556 U.S. 662 (2009) ............................................................................................12
 Barrett v. PJT Partners Inc.,
   No. 16-cv-2841, 2017 WL 3995606 (S.D.N.Y. Sept. 8, 2017)...........................38

 Bartesch v. Cook,
   941 F. Supp. 2d 501 (D. Del. 2013) ..............................................................20, 22
 Cal. Pub. Emps.’ Ret. Sys. v. Chubb Corp.,
   394 F.3d 126 (3d Cir. 2004) ..........................................................................17, 39
 Chan v. New Oriental Educ. & Tech. Grp. Inc.,
   No. 16-cv-9279, 2019 WL 2865452 (D.N.J. July 3, 2019) ..........................18, 22
 Chill v. Gen. Elec. Co.,
   101 F.3d 263 (2d Cir. 1996), aff’d sub. nom. Globis Capital Partners, L.P. v.
   Stonepath Grp., Inc., 241 F. App’x 832 (3d Cir. 2007) ......................................15
 City of Edinburgh Council v. Pfizer, Inc.,
    754 F.3d 159 (3d Cir. 2014) ..................................................................................4
 City of Roseville Emps.’ Ret. Sys. v. Horizon Lines, Inc.,
    442 F. App’x 672 (3d Cir. 2011) ...................................................................33, 38

 City of Roseville Emps.’ Ret. Sys. v. Horizon Lines, Inc.,
    713 F. Supp. 2d 378 (D. Del. 2010) ............................................................ passim
 In re Columbia Labs., Inc. Sec. Litig.,
     No. 12-cv-614, 2013 WL 5719500 (D.N.J. Oct. 21, 2013) ................................39

                                                          iii
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 In re Cybershop.com Sec. Litig.,
     189 F. Supp. 2d 214 (D.N.J. 2002) .....................................................................40

 Dura Pharms., Inc. v. Broudo,
   544 U.S. 336 (2005) ............................................................................................12

 In re Exxon Mobil Corp. Sec. Litig.,
     387 F. Supp. 2d 407 (D.N.J. 2005) .....................................................................31

 In re Gentiva Sec. Litig.,
     932 F. Supp. 2d 352 (E.D.N.Y. 2013) ...........................................................22, 23

 Globis Capital Partners, L.P. v. Stonepath Grp., Inc.,
    241 F. App’x 832 (3d Cir. 2007) ...................................................................13, 15

 Gold v. Ford Motor Co.,
   577 F. App’x 120 (3d Cir. 2014) .........................................................................13

 GSC Partners CDO Fund v. Washington,
   368 F.3d 228 (3d Cir. 2004) ................................................................................12

 In re Hertz Glob. Holdings Inc.,
     905 F.3d 106 (3d Cir. 2018) .........................................................................passim
 In re Hertz Glob. Holdings, Inc. Sec. Litig.,
     No. 13-cv-7050, 2017 WL 1536223 (D.N.J. Apr. 27, 2017), aff’d sub. nom.
     In re Hertz Glob. Holdings Inc., 905 F.3d 106 (3d Cir. 2018) .........16, 23, 24, 29
 Higginbotham v. Baxter Int’l, Inc.,
    495 F.3d 753 (7th Cir. 2007) .........................................................................15, 36
 In re Intelligroup Sec. Litig.,
     527 F. Supp. 2d 262 (D.N.J. 2007) .........................................................16, 17, 21

 In re Interpool, Inc. Sec. Litig.,
     No. 04-cv-321, 2005 WL 2000237 (D.N.J. Aug. 17, 2005) ...............................28
 Janus Capital Grp., Inc. v. First Derivative Traders,
    564 U.S. 135 (2011) ............................................................................................38
 Kalnit v. Eichler,
   264 F.3d 131 (2d Cir. 2001) ................................................................................37

                                                          iv
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 Lorenzo v. SEC,
    139 S. Ct. 1094 (2019) ...................................................................................... 38

 Mizzaro v. Home Depot, Inc.,
   544 F.3d 1230 (11th Cir. 2008) ...........................................................................35

 In re Nice Systems, Ltd. Sec. Litig.,
     135 F. Supp. 2d 551 (D.N.J. 2001) .....................................................................31

 Novak v. Kasaks,
   216 F.3d 300 (2d Cir. 2000) ................................................................................21

 In re Omnicare, Inc. Sec. Litig.,
     769 F.3d 455 (6th Cir. 2014) ...............................................................................36

 In re Optionable Sec. Litig.,
     577 F. Supp. 2d 681 (S.D.N.Y. 2008) ...........................................................17, 18
 Oran v. Stafford,
   226 F.3d 275 (3d Cir. 2000) ................................................................................30
 In re Party City Sec. Litig.,
     147 F. Supp. 2d 282 (D.N.J. 2001) .....................................................................30

 Rahman v. Kid Brands, Inc.,
   736 F.3d 237 (3d Cir. 2013) ..........................................................................18, 36
 In re Rockefeller Ctr. Props., Inc. Sec. Litig.,
     311 F.3d 198 (3d Cir. 2002) ................................................................................17

 In re Stonepath Grp., Inc. Sec. Litig.,
     No. 04-cv-4515, 2006 WL 890767 (E.D. Pa. Apr. 3, 2006) ...............................15

 Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
    551 U.S. 308 (2007) ......................................................................................12, 13

 Wilson v. Bernstock,
    195 F. Supp. 2d 619 (D.N.J. 2002) ...............................................................17, 21

                                                         v
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                                              STATUTES & RULES

 15 U.S.C. § 78u-4(b) ............................................................................................1, 12

 Fed. R. Civ. P. 9(b) .........................................................................................1, 12, 39
 Fed. R. Civ. P. 12(b)(6) ........................................................................................1, 12

 Sec. 10(b) of the Sec. Exch. Act of 1934 ..........................................................passim

 Sec. 20(a) of the Sec. Exch. Act of 1934 .............................................................6, 39

                                                           vi
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       Defendants BT Group plc (“BT Group” or the “Company”), Ian Livingston,

 Gavin E. Patterson, Tony Chanmugam, Nick Rose, Luis Alvarez, and Richard

 Cameron (the “individual defendants,” and together with BT Group, the

 “defendants”) respectfully submit this memorandum of law in support of their

 motion to dismiss the Fourth Amended Complaint, dated August 16, 2019,

 pursuant to § 78u-4(b) of the Private Securities Litigation Reform Act of 1995 (the

 “PSLRA”) and Federal Rules of Civil Procedure 9(b) and 12(b)(6).

                           PRELIMINARY STATEMENT

       Plaintiffs’ Fourth Amended Complaint suffers from the same defects that

 caused this Court to dismiss plaintiffs’ earlier complaint. Plaintiffs previously

 alleged that defendants intentionally misled investors about misconduct at BT Italy,

 one of BT Group’s 300 subsidiaries. The Court held that plaintiffs failed to plead

 with particularity facts giving rise to a strong inference that any of the individual

 defendants had acted with scienter, or that any other employees acted with scienter

 that could be imputed to BT Group under a theory of “corporate scienter.” In so

 doing, the Court held that plaintiffs had not even “raise[d] a plausible inference” of

 scienter and that “[t]he more reasonable inference is that these individual

 defendants were unaware of the fraud or other problems at BT Italy that later

 emerged.” (Dkt. 40 at 13, Opinion Granting Defs.’ Mot. to Dismiss Pls.’ First Am.

 Compl. (the “Order”).)

                                          -1-
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       In an effort to resurrect their baseless claims, plaintiffs return with an

 amended complaint that fails to include any new or additional factual allegations

 that could draw into question this Court’s previous conclusions. Notably, plaintiffs

 do not attempt to plead anything new or different as to several of the individual

 defendants and therefore had no colorable basis even to include them in their latest

 complaint. Where plaintiffs do allege purportedly “new” facts, they still fail to

 create a strong inference of scienter for the reasons set forth below.

       First, plaintiffs emphasize that BT Group investigated reports of “bullying”

 in 2016, but this was already alleged in the First Amended Complaint and rejected

 by the Court as an inadequate basis to allege knowledge of fraud.

       Second, plaintiffs allege that an anonymous BT Italy employee told Reuters

 that it would have been “impossible” for “London” to have been unaware of the

 BT Italy fraud, but courts have routinely held that such speculative “must-have-

 known” allegations are insufficient under the PSLRA. That conclusion is

 particularly appropriate here, where BT Italy only constituted one percent of BT

 Group’s EBITDA and workforce.

       Third, based again solely on news articles, plaintiffs allege that perpetrators

 of the fraud—the ex-BT Italy CEO and CFO—claimed that transactions in Italy

 were approved by BT Group. Plaintiffs ignore that these same articles (i) reflect

 that the ex-officers denied knowledge of any wrongdoing, let alone fraud; and

                                          -2-
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  (ii) lack any details that would support a permissible inference that BT Group

  knew about fraudulent activities. In the absence of any such details—the “who,

  what, where, when, and how” required by the PSLRA—such allegations fall well

  short of the requirement that defendants’ scienter be pled with particularity.

        Fourth, plaintiffs allege that defendants Cameron and Alvarez are among 23

  individuals being investigated by Italian authorities in connection with the BT Italy

  fraud. Based on references to emails in news articles, plaintiffs allege that these

  defendants “set unrealistically high earnings objectives that could not be met

  absent accounting manipulations.” But the Third Circuit has made clear that

  alleged pressure to meet high earnings objectives and investigations by

  government authorities are not sufficient to plead scienter, and the articles and

  emails upon which plaintiffs rely do not give rise to a strong inference that

  defendants were aware of the fraud.

        Finally, plaintiffs allege (again, based solely on news articles) that a report

  prepared by KPMG found that BT Global Services executives were not sufficiently

  zealous in scrutinizing BT Italy, but as this Court and the Third Circuit have made

  clear, allegations of negligence or mismanagement do not equate to fraud.

        In addition to failing to plead scienter against any individual defendants,

  plaintiffs also fail to otherwise plead scienter against BT Group. Plaintiffs seek to

  impute scienter to BT Group, but have not pleaded particularized facts supporting a

                                           -3-
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  strong inference that any of the alleged misstatements were made by an individual

  with scienter. In an attempt to cure this deficiency, plaintiffs again seek to rely on

  the so-called corporate scienter doctrine. In dismissing the First Amended

  Complaint, however, this Court held that, even assuming the Third Circuit would

  recognize the corporate scienter doctrine, it would do so only in “extraordinary”

  circumstances that are not present here. The Fourth Amended Complaint simply

  does not plead the type of extraordinary circumstances to which this Court

  previously referred. Accordingly, plaintiffs’ scienter allegations regarding

  individuals who were not responsible for the alleged misstatements—Alvarez,

  Cameron, and Cavestany—are not only legally deficient but also cannot be

  imputed to BT Group and cannot form the basis of a securities fraud claim.

                               STATEMENT OF FACTS

      I.   Background

           BT Group is a multinational telecommunications company, headquartered in

  London, and its American Depository Receipts (“ADRs”) trade on the New York

  Stock Exchange. (Fourth Amended Complaint (“FAC”) ¶ 24.)1 BT Group has

  several customer-facing lines of business, one of which is Global Services (“BT

  1
   The facts set forth herein are drawn from the Fourth Amended Complaint,
  documents incorporated by reference therein, and matters of which judicial notice
  may be taken. Cf. City of Edinburgh Council v. Pfizer, Inc., 754 F.3d 159, 166 (3d
  Cir. 2014). Documents cited herein are attached as exhibits to the Declaration of
  James P. Rouhandeh, dated October 4, 2019, and referred to by exhibit (“Ex. __”).

                                           -4-
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  Global Services”). (Id. ¶ 46.) The Continental Europe division of the BT Global

  Services line of business includes BT Italia S.p.A. (“BT Italy”), a subsidiary of BT

  Group in Milan. (See id. ¶¶ 2, 48, 54.) BT Italy is one of over 300 subsidiaries of

  BT Group. (Ex. A, 2017 BT Group Annual Report at 238–48.) For the financial

  year ending March 2016, BT Italy contributed approximately one percent to BT

  Group’s EBITDA (FAC ¶ 69), and employed about one percent of BT Group’s total

  workforce (see id. ¶ 54; Ex. B, 2016 BT Group Annual Report at 32).

        On October 27, 2016, BT Group informed investors that it had learned of

  “inappropriate management behaviour” at BT Italy, had conducted an internal

  investigation, and was taking a £145 million write-down based on its “current best

  estimate of the financial impact.”2 (FAC ¶¶ 65–66.) The same day, the price of BT

  Group ADRs fell $0.57 per ADR. (Id. ¶ 67.) On January 24, 2017, BT Group

  updated investors that further investigation had “revealed that the extent and

  complexity of inappropriate behaviour in the Italian business were far greater than

  previously identified,” resulting in an increase to the financial adjustments to

  approximately £530 million. (Id. ¶¶ 68–69.) Following the announcement, the

  price of BT Group ADRs fell $5.05 per ADR. (Id. ¶ 75.) As a result of the

  “improper behaviour” at BT Italy, BT Group suspended members of BT Italy

  2
   Unless otherwise noted, emphasis and quotation marks in the complaint have
  been removed throughout.

                                           -5-
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  senior management and appointed a new Chief Executive of BT Italy. (Id. ¶ 69.)

  On May 25, 2017, BT Group filed its 2017 annual report, which disclosed that the

  Company’s investigation had identified “collusion and override of controls within

  [BT Italy],” and that BT Group’s controls were “ineffective” as of March 31, 2017,

  due to a “material control weakness” with regard to BT Italy. (Id. ¶¶ 123–24.)

        Following disclosure of the internal investigation, plaintiffs allege that

  Italian authorities opened an investigation into BT Italy (id. ¶ 214); that BT Group

  itself filed a criminal complaint with Italian prosecutors against former BT Italy

  employees (who plaintiffs allege “were all fired”) for “breaking company rules and

  unlawful conduct” (id. ¶¶ 115–17); and that the Italian prosecutors’ “preliminary

  investigation” named defendants Alvarez and Cameron as “suspects” (id. ¶ 98).

  II.   Procedural History and the Court’s Decision to Dismiss Plaintiffs’
        First Amended Complaint
        Plaintiffs filed their initial complaint on January 25, 2017 (Dkt. 1), and their

  First Amended Complaint on November 21, 2017 (Dkt. 26), pursuing claims under

  Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.

  Plaintiffs alleged that defendants knowingly misled investors regarding the BT

  Italy fraud and identified five categories of alleged misstatements between May 10,

  2013, and January 23, 2017 (the “class period”): (1) statements regarding BT

  Group’s quarterly and year-end financial results (First Amended Complaint ¶¶ 87,

  93–96, 101–04, 110–13, 118); (2) statements that BT Group’s internal control over

                                          -6-
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  financial reporting was effective (id. ¶¶ 89, 97, 105, 114); (3) certifications by BT

  Group’s CEO and CFO about the Company’s internal and disclosure controls (id.

  ¶¶ 90, 98, 106, 115); (4) reports on BT Group’s Board Audit and Risk Committee’s

  (“BARC”) attention to BT Italy (id. ¶¶ 91, 99, 107–08, 116); and (5) BT Group’s

  publicly filed financial statements, which plaintiffs allege were “presented in

  violation of [International Financial Reporting Standards]” (id. ¶¶ 124–80).

        In the First Amended Complaint, plaintiffs relied on three categories of

  allegations in an attempt to establish scienter: (1) that the BARC was reviewing

  BT Italy’s operations and control environment during the class period (see, e.g., id.

  ¶¶ 40–48, 193, 202(b)); (2) that unidentified BT Italy employees told BT Global

  Services employee Jacinto Cavestany that “something” was “wrong with [BT

  Italy]’s financial results” (see, e.g., id. ¶¶ 62, 194); and (3) that BT Italy employees

  engaged in intentional misconduct (see, e.g., id. ¶¶ 192, 202(a)). Plaintiffs also

  included a smattering of other scienter allegations (see, e.g., id. ¶¶ 25, 27, 46, 76–

  78, 108, 124–52, 173, 181 195, 197, 202), including those related to employee

  resignations (id. ¶¶ 4, 23, 58, 75) and clawbacks of remuneration (id. ¶¶ 4, 84–86).

        Defendants moved to dismiss the First Amended Complaint on the basis that

  plaintiffs had failed to allege facts giving rise to a strong inference of scienter.

  (Dkt. 28-2.) On August 1, 2018, this Court granted defendants’ motion to dismiss

  in full. (Order at 1.) In doing so, the Court addressed all of plaintiffs’ primary and

                                            -7-
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  ancillary scienter allegations, and held that none were sufficient to state a claim.

  (See Order at 13, 17–18.)

         First, with respect to plaintiffs’ allegations regarding the BARC and the

  individual defendants, this Court held:

         [T]he individual defendants had reports of internal-control problems at
         one of BT Group’s 300 subsidiaries. The reports did not reveal fraud
         or point out problems with the company’s core operations or products.
         The warnings, such as they were, involved potential control issues; in
         themselves, they did not alert these defendants that the company’s
         public statements were incorrect. . . . [T]he mere fact that the Audit
         Committee was looking into the management and accounting controls
         in place at BT Italy was not enough to tip the balance, given the stiff
         PSLRA pleading standard[.]

  (Id. at 12.) Accordingly, the Court held:

         The allegations in [the First Amended Complaint] do not raise a
         plausible inference that the individual defendants turned a “blind eye”
         to “red flags” or had “no reasonable basis” for certifying the Sarbanes-
         Oxley reports. The more reasonable inference is that these individual
         defendants were unaware of the fraud or other problems at BT Italy that
         later emerged.

  (Id. at 13.)

         Second, in response to plaintiffs’ “corporate scienter” allegations, the Court

  held that even “[a]ssuming arguendo that the Third Circuit would permit a

  complaint to plead ‘corporate scienter,’” plaintiffs’ allegations “would not suffice.”

  (Id. at 15–17.) Regarding plaintiffs’ allegations that BT Italy employees were

  aware of the fraud, the Court refused to impute scienter to BT Group because the

  fact “[t]hat BT Italy executives were allegedly knowledgeable about the fraud does

                                            -8-
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  not mean that the parent company’s executives from BT Group were aware.” (Id.

  at 15.) Similarly, with respect to allegations of BT Global Services employee

  Cavestany’s knowledge, the Court found that “[e]ven on the generous assumption

  that Cavestany knew of fraud at BT Italy, his knowledge cannot be imputed to BT

  Group.” (Id. at 15–16.) Regarding “BT Group’s reduction of the pay of

  executives,” the Court found that this “does not give rise to a compelling inference

  of scienter,” as “[n]o facts are pled to suggest that the reduction in pay was due to

  their participation in any fraud.” (Id. at 16.) This Court held, in sum:

         [B]ased on the allegations, it is at least as likely that key individuals at
         BT Group were unaware of the fraud, were not reckless in ignoring it,
         and reacted appropriately when the relevant facts came out. Even if the
         corporate-scienter doctrine was permitted in this Circuit, these facts
         would not satisfy that doctrine.

  (Id. at 17.)

 III.    Plaintiffs’ Second, Third, and Fourth Amended Complaints

         On October 1, 2018, plaintiffs filed a Second Amended Complaint (Dkt. 47),

  which defendants moved to dismiss (Dkt. 48). With the consent of the parties, on

  December 28, 2018, plaintiffs filed a Third Amended Complaint, which added

  BARC Chairman Nick Rose as an individual defendant, but was otherwise nearly

  identical to the Second Amended Complaint. (Dkt. 54.) Defendants moved to

  dismiss this complaint as well. (Dkt. 55.)

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        After that motion to dismiss was fully briefed, plaintiffs filed several letters

  with the Court that “purport[ed] to supplement the complaint’s allegations.” (Dkt.

  64 at 1.) Although the Court found that defendants’ motion to dismiss could not

  “be defeated by the belated submission of additional facts and evidence outside the

  four corners of the complaint,” the Court found it likely that “even if the Third

  Amended Complaint were dismissed on an as-is basis, the plaintiffs would move to

  amend it to incorporate their supplemental allegations.” (Id.) To avoid “wast[ing]

  the resources of the parties or the court,” the Court administratively terminated

  defendants’ motion to dismiss and granted plaintiffs leave to file another amended

  complaint within 30 days. (Id. at 1–2.)

        On August 16, 2019, plaintiffs filed the Fourth Amended Complaint, which

  added Section 10(b) claims against Luis Alvarez and Richard Cameron.3 (Dkt.

  65.) Attempting to bolster their previously rejected scienter allegations, plaintiffs

  now assert the following: (1) “at the start of 2016, [BT Group] received reports of

  bullying cases at BT Italy, in response to which senior Human Resources officials

  visited the Italian offices and investigated,” and despite this, individual defendant

  Rose “stated in BT Group’s 2016 Annual Report [that it] continued to monitor [its]

  operations in Italy and progress has been made to improve the control

  3
   Cameron is a new defendant. Alvarez has been a defendant from the outset, but
  plaintiffs had not previously alleged a Section 10(b) claim against him.

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  environment” (FAC ¶¶ 11, 83, 273, 280(h)); (2) anonymous BT Italy sources

  allegedly made conclusory and unsubstantiated statements to Reuters that “it

  would be impossible that London had no way of realizing what was happening in

  Italy and . . . for an auditor not to realize that something was amiss” (id. ¶¶ 5, 93,

  270, 280(f)); (3) according to news articles, BT Italy’s former CEO and CFO

  allegedly stated, without further specifics, that BT Italy financial transactions were

  verified and authorized by BT Group (see, e.g., id. ¶¶ 5, 92, 266); (4) an

  undisclosed document allegedly prepared by Italian prosecutors and reported on by

  Reuters purportedly names defendants Alvarez and Cameron, who are not alleged

  to have made or disseminated any of the alleged misstatements, as “suspects in the

  criminal case” and accuses them of “setting unrealistically high business targets

  and of complicity in false accounting at BT Italy” (id. ¶¶ 98–99, 253); and (5)

  again, according to news articles, an internal report by KPMG shows “executives

  at BT global services did not sufficiently challenge numbers submitted by Italian

  staff,” “inquiries from London were ignored or met by [unsatisfactory] responses,”

  and “global services staff often failed to follow through to get answers” (id. ¶ 12;

  see also ¶ 113).

        In addition to the above, plaintiffs also make ancillary allegations relating to

  the alleged scienter of two individual defendants. First, plaintiffs repeat allegations

  from their May 25, 2018 letter to the Court that “BT Group applied the malus

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  provisions to all of [former BT Group CFO Tony] Chanmugam’s Deferred Bonus

  Plan (‘DBP’) awards.” (Id. ¶ 7; Dkt. 35 at 1–2.) Relatedly, plaintiffs allege that

  “Chanmugam was either fired or preemptively quit in July 2016 in connection with

  BT Group’s internal investigation of BT Italy.” (FAC ¶ 7; see also id. ¶¶ 128–31,

  272, 280(g).) Finally, plaintiffs allege that Alvarez sold BT Group shares worth

  approximately £675,000 in December 2016 (id. ¶¶ 101, 254)—less than half of his

  holdings—without any further allegations regarding these sales or any others.

                                  LEGAL STANDARDS

        A complaint must be dismissed under Rule 12(b)(6) unless it contains

  “sufficient factual matter, accepted as true, to state a claim to relief that is plausible

  on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks

  and citation omitted). Plaintiffs must also satisfy Rule 9(b)’s and the PSLRA’s

  heightened pleading requirements, which mandate that “the circumstances

  constituting fraud . . . be stated with particularity.” GSC Partners CDO Fund v.

  Washington, 368 F.3d 228, 236 (3d Cir. 2004); see also Order at 7–8.

        The PSLRA requires that securities fraud complaints “state with particularity

  facts giving rise to a strong inference that the defendant acted with the required

  state of mind”—i.e., scienter. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 345

  (2005) (quoting 15 U.S.C. §§ 78u-4(b)(1), (2)). Scienter is “a mental state

  embracing intent to deceive, manipulate, or defraud.” (Order at 8 (quoting Tellabs,

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  Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 319 (2007)).) To establish

  scienter, plaintiffs must allege facts giving rise to a “strong inference” of “either

  reckless or conscious behavior.” Gold v. Ford Motor Co., 577 F. App’x 120, 122–

  23 (3d Cir. 2014) (internal quotations marks and citations omitted). Recklessness

  is a state of mind “closely approach[ing] . . . conscious deception,” “not merely

  simple, or even inexcusable negligence.” Globis Capital Partners, L.P. v.

  Stonepath Grp., Inc., 241 F. App’x 832, 835 (3d Cir. 2007) (internal quotation

  marks and citations omitted); see also Order at 13 (“The issue, after all, is not

  negligence, but scienter.”). “[T]he inference of scienter must be more than merely

  ‘reasonable’ or ‘permissible’” and must be “at least as compelling as any opposing

  inference of nonfraudulent intent.” Tellabs, 551 U.S. at 314, 324.

                                      ARGUMENT

  I.    Plaintiffs Fail to Plead Particularized Facts Giving Rise to a Strong
        Inference of Scienter Required for a Section 10(b) Claim

        This Court dismissed plaintiffs’ First Amended Complaint for failure to

  plead facts giving rise to a strong inference that any of the defendants acted with

  scienter or that any other employee acted with scienter that can be imputed to the

  Company. The Fourth Amended Complaint suffers from the same failure and

  should be dismissed as well.

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        A.     Plaintiffs Fail to Plead Facts Supporting a Strong Inference of
               Scienter Regarding the Individual Defendants

        This Court, in dismissing the First Amended Complaint, determined that

  plaintiffs had not even “raise[d] a plausible inference” of scienter and that “[t]he

  more reasonable inference is that these individual defendants were unaware of the

  fraud or other problems at BT Italy that later emerged.” 4 (Order at 13.) For the

  reasons set forth below, plaintiffs’ purportedly “new” scienter allegations provide

  no basis to disturb the Court’s previous conclusion.

                1.    Allegations of “Bullying” at BT Italy Are Not New and
                      Do Not Support a Strong Inference of Scienter

        Plaintiffs claim to be making a new allegation that “at the start of 2016, the

  Company received reports of bullying cases at BT Italy, in response to which

  senior Human Resources officials visited the Italian offices and investigated” and

  that, “[d]espite this,” individual defendant Rose, Chairman of the BARC, said in

  BT Group’s 2016 Annual Report that “[w]e have continued to monitor our

  operations in Italy and progress has been made to improve the control

  environment.” (FAC ¶¶ 11, 83, 273, 280(h).) Despite plaintiffs’ renewed focus on

  4
    Plaintiffs’ failure to adequately plead scienter as to any defendant is further
  demonstrated by their lumping the individual defendants together, including, for
  example, by grouping Ian Livingston in allegations relating to the period after he
  left the Company. (See FAC ¶ 25 (“Livingston . . . was the Company’s CEO and a
  member of BT Group’s Board of Directors . . . from 2008 until September 2013.”
  (emphasis added)); id. ¶ 1 (May 10, 2013 to January 23, 2017 class period).)

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  “bullying,” this allegation is not new. In fact, the first word in the title of the

  Reuters article plaintiffs relied on in the First Amended Complaint was “bullying.”

  (Ex. C, March 30, 2017 Reuters Article (“English Reuters Article”) at 1; see, e.g.,

  First Amended Complaint ¶ 62.) Plaintiffs raised these same 2016 BARC

  disclosures (First Amended Complaint ¶¶ 47, 116, 174) and reports of bullying (id.

  ¶¶ 62, 64) in their First Amended Complaint. This Court already determined that

  these facts do not raise a strong inference of scienter. (See Order at 11–13.)

        Further, the fact that BT Group received and investigated reports of bullying

  at BT Italy does not suggest that any of the defendants were aware of fraud there.

  As the Court already recognized, knowing enough to launch an investigation is not

  sufficient to show knowledge of fraud. See Order at 12–13 (“Knowing enough to

  launch an investigation . . . is a very great distance from convincing proof of intent

  to deceive.” (quoting Higginbotham v. Baxter Int’l, Inc., 495 F.3d 753, 758 (7th

  Cir. 2007))); In re Stonepath Grp., Inc. Sec. Litig., No. 04-cv-4515, 2006 WL

  890767, at *12 (E.D. Pa. Apr. 3, 2006) (finding “fraud cannot be inferred simply

  because [the parent corporation] might have been more curious or concerned about

  the activity at [its subsidiary]” (alterations in original) (quoting Chill v. Gen. Elec.

  Co., 101 F.3d 263, 270 (2d Cir. 1996))), aff’d sub nom. Globis, 241 F. App’x 832.

        Moreover, bullying at most reflects mismanagement, not fraud. See In re

  Hertz Glob. Holdings, Inc. Sec. Litig. (“Hertz I”), No. 13-cv-7050, 2017 WL

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  1536223, at *16–17 (D.N.J. Apr. 27, 2017) (finding allegations that senior

  management of parent company set “inappropriate tone at the top,” resulting in

  accounting violations, reflected inactionable “mismanagement”), aff’d sub nom. In

  re Hertz Glob. Holdings Inc. (“Hertz II”), 905 F.3d 106, 117 (3d Cir. 2018).

  Plaintiffs’ bullying allegations do not support a strong inference of scienter.

                2.     “Must Have Known” Allegations from Anonymous BT
                       Italy Sources in a Newspaper Article Are Legally
                       Insufficient to Plead Scienter

        Plaintiffs next rely on conclusory and unsubstantiated statements in a March

  30, 2017 Italian Reuters article (“March 2017 Article”), attributed to anonymous

  BT Italy sources, that it is “impossible that London had no way of realizing what

  was happening in Italy” and that “it would have been practically impossible for an

  auditor not to realize that something was amiss.” (FAC ¶¶ 5, 93–94, 270, 280(f);

  FAC Ex. A, March 2017 Article at 1–2.) These allegations are inadequate to plead

  scienter as a matter of law.

        As a threshold matter, the anonymous sources’ statements that it would be

  “impossible that London had no way of realizing what was happening in Italy” and

  that “it would have been practically impossible for an auditor not to realize that

  something was amiss” (see, e.g., FAC ¶ 5) are nothing more than “bald

  declaration[s]” that are “void of any factual basi[s].” In re Intelligroup Sec. Litig.,

  527 F. Supp. 2d 262, 361–62 (D.N.J. 2007) (holding that statements by confidential

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  witness that “there was outright fraud and there was outright incompetence” did

  not “even add a credible circumstantial ‘piece to the scienter puzzle’”). As a

  matter of law, these statements are too speculative to plead scienter. See, e.g., Cal.

  Pub. Emps.’ Ret. Sys. v. Chubb Corp., 394 F.3d 126, 155 (3d Cir. 2004); In re

  Advanta Corp. Sec. Litig., 180 F.3d 525, 539 (3d Cir. 1999).5

        Even if such allegations were not per se insufficient to plead scienter, they

  nonetheless fail to meet the heightened particularity requirements of the PSLRA.

  Courts, including the Third Circuit, frequently find that news articles cannot

  support a strong inference of scienter because they are insufficiently specific. See,

  e.g., In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 220 (3d Cir. 2002)

  (finding newspaper articles cited by plaintiffs failed to meet the PSLRA’s

  “requisite specificity”); In re Optionable Sec. Litig., 577 F. Supp. 2d 681, 690

  5
    Plaintiffs’ allegations, based on the March 2017 Article, that “the accounting
  software system at BT [Italy] is open to the parent company and it is possible to
  conduct checks by logging into the system at any time” (FAC ¶ 93); that “on more
  than one occasion, [factoring] transactions were recorded on the UK intranet” (id.
  ¶ 95); and that fraudulent billing by BT Italy “was rendered simpler by the fact that
  at BT [Italy] there were dozens of different independent accounting software
  systems” (id. ¶ 96) are similarly irrelevant because “[p]laintiffs do not allege that
  [d]efendants either reviewed or had access to specifically identified documents or
  memoranda discussing the [BT Italy fraud],” Wilson v. Bernstock, 195 F. Supp. 2d
  619, 640 (D.N.J. 2002), and the “covert nature of [the fraud] distinguishes this case
  from those where an executive-defendant’s examination of routine financial data or
  other internal company information would have informed him of the falsity of his
  statements,” City of Roseville Emps.’ Ret. Sys. v. Horizon Lines, Inc.
  (“Roseville I”), 713 F. Supp. 2d 378, 400 (D. Del. 2010).

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  (S.D.N.Y. 2008) (“[A]rticles should be credited only to the extent that other factual

  allegations would be—if they are sufficiently particular and detailed to indicate

  their reliability.” (internal quotation marks and citations omitted)).

        As Judge Hayden recently explained in dismissing a securities fraud lawsuit,

  “Reuters is not a securities fraud plaintiff, and while newspaper articles can

  certainly alert investors to wrongdoing, the complaint must rise or fall on

  allegations about defendant[’s] conduct and not on wide-eyed citation to the

  gratuitous commentary of outsiders.” Chan v. New Oriental Educ. & Tech. Grp.

  Inc., No. 16-cv-9279, 2019 WL 2865452, at *8 (D.N.J. July 3, 2019) (alteration in

  original) (internal quotation marks and citation omitted). The allegations from

  unnamed BT Italy sources in the March 2017 Article must be “steeply” discounted

  because the article fails to provide any particularity regarding “the detail provided

  by the confidential sources, the sources’ basis of knowledge, the reliability of the

  sources, the corroborative nature of other facts alleged, including from other

  sources, the coherence and plausibility of the allegations, and similar indicia.”

  Rahman v. Kid Brands, Inc., 736 F.3d 237, 244 (3d Cir. 2013) (internal quotation

  marks and citation omitted). The article does not indicate any of the sources’

  positions at BT Italy, their dates of employment, or the bases for their knowledge,

  and therefore lacks sufficient information for the Court to determine whether the

  sources would have known about the BT Italy fraud, much less BT Group’s

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  awareness of it. See id. at 240–41, 244–45 (discounting confidential witnesses’

  allegations, even where plaintiff provided positions and employment dates,

  because they “offer[ed] little more than generalized allegations with few specifics

  and even less concrete support”). Accordingly, these allegations are legally

  deficient because they lack the requisite specificity.

                3.    Statements Attributed to BT Italy’s Former CEO and
                      CFO in Newspaper Articles Are Not New Allegations,
                      and Are Legally Insufficient to Plead Scienter

        Plaintiffs allege, also based on the March 2017 Article, that defendants were

  aware of the BT Italy fraud because the ex-BT Italy CEO, Gianluca Cimini, told

  Reuters that “the financial transactions . . . were properly verified and authorized

  by the parent company and by the audit units and firms.” (FAC ¶ 92.) Plaintiffs

  similarly allege that defendants were aware of the fraud because—again, according

  to the Italian version of an April 23, 2019 Reuters article (“Italian April 2019

  Article”)—the ex-CFO of BT Italy, Luca Sebastiani, supposedly made statements

  to Italian prosecutors that “[a]ll the main economic and financial transactions

  carried out by BT [Italy] were shared with the heads of the European Region [and]

  with Luis Alvarez (Global Service CEO) and Richard Cameron (Global Service

  CFO).” (Id. ¶109; FAC Ex. E, Italian April 2019 Article at 2–3.) These allegations

  are insufficient to plead scienter on multiple grounds.

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        First, these allegations are not new. Plaintiffs, in their First Amended

  Complaint, relied on another Reuters article, written by the same author in March

  2017, that included a nearly identical statement from Cimini. (See, e.g., First

  Amended Complaint ¶¶ 62, 151; Ex. C, English Reuters Article at 2 (“In relation to

  alleged financial irregularities, [Cimini] said [to Reuters that] he knew of no illegal

  behaviour and that BT Italy’s accounts were verified by head office during his time

  as CEO.”).) Plaintiffs’ allegations regarding the Sebastiani statements are

  substantively identical and do nothing to bolster plaintiffs’ claim.

        Second, vague, generalized references to BT Group having been aware of, or

  having “verified and authorized,” “transactions” do nothing to support plaintiffs’

  scienter allegations. The same individuals (Cimini and Sebastiani) who Reuters

  says made these assertions never claimed that BT Group or the other individual

  defendants were aware of anything fraudulent. See Bartesch v. Cook, 941 F. Supp.

  2d 501, 507 (D. Del. 2013) (“Even if the article were sufficiently reliable and

  independent, the article itself does not suggest that defendants knew and were

  misrepresenting [the facts] and, therefore, is insufficient to support allegations that

  defendants made fraudulent misstatements . . . .”). In fact, they do the opposite.

  They deny the existence of any fraud whatsoever. Cimini told Reuters he was “not

  personally aware of illegal conduct” and did not “have documents showing illegal

  conduct.” (FAC Ex. A, March 2017 Article at 3 (emphasis added).) Sebastiani, for

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  his part, claimed “the British office [was] informed [of and had] been aware of the

  critical nature of some issues for some time,” but he too did not say that defendants

  were aware of the fraudulent nature of any of these issues. (FAC ¶ 109.)

        Third, Cimini’s and Sebastiani’s purported statements lack the particularity

  required to allege scienter. Although Cimini allegedly told Reuters the financial

  transactions were “verified and authorized” by BT Group (id. ¶¶ 92, 266, 280(e)),

  he does not specify which financial transactions were verified or authorized, in

  what documents they appeared, when they were reviewed, or by whom. Sebastiani

  reportedly cited to “a series of filed internal documents” (id. ¶ 109), but there is

  similarly no indication of what these documents were, what they said, or even if

  they were ever actually received or reviewed by defendants. Without this

  information, these statements are too vague to meet the particularity requirements

  of the PSLRA. See, e.g., Novak v. Kasaks, 216 F.3d 300, 309 (2d Cir. 2000)

  (“Where plaintiffs contend defendants had access to contrary facts, they must

  specifically identify the reports or statements containing this information.”);

  Intelligroup, 527 F. Supp. 2d at 286; Wilson, 195 F. Supp. 2d at 640–41.

        Finally, Cimini’s and Sebastiani’s statements are not reliable. As plaintiffs

  allege, Cimini himself was responsible for the “climate of terror” at BT Italy (FAC

  ¶ 78), and both Cimini and Sebastiani were suspended by the Company “[i]n

  response to the inappropriate behaviours [the Company] identified in [its] Italian

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  business” (id. ¶¶ 69, 74, 125). In light of these facts, these BT Italy employees’

  self-serving statements are not sufficiently reliable to meet the pleading

  requirements of the PSLRA. See Bartesch, 941 F. Supp. 2d at 506–07 (holding

  article not sufficiently reliable to meet PSLRA’s pleading requirements where

  “written by an executive at a company currently in litigation with [defendants’

  employer] over the subject matter of the article,” which “might suggest that the

  author has an incentive to disparage [the employer]”).

                4.     Allegations Regarding the Italian Government’s
                       Investigation and KPMG Report Contained in News
                       Articles Are Legally Insufficient to Plead Scienter

        Plaintiffs also cite to a handful of news articles written after the Court

  dismissed the First Amended Complaint that describe the Italian government’s

  investigation of BT Italy and a report written by KPMG. (See FAC Exs. B–E.)

  These recent articles too add nothing to alter the Court’s previous conclusion that

  plaintiffs have failed to plead a strong inference of scienter. 6

        First, as the Court already recognized, “[t]he existence of an investigation by

  the Italian government does not support a strong inference of scienter on the part of

  6
    For example, plaintiffs allege, based on a February 13, 2019 Telegraph article
  (“Telegraph Article”), that “Alvarez, Cameron, and Sciolla all knew about falsely
  inflated sales figures at BT [Italy], according [to] documents issued by authorities
  in Milan.” (FAC ¶ 100 (second alteration in original).) Yet, the article relied upon
  by plaintiffs is entirely devoid of any specific facts (see FAC Ex. C, Telegraph
  Article at 3), and is therefore insufficient to meet the PSLRA’s strict pleading
  requirements. Chan, 2019 WL 2865452, at *8.

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  BT Group.” (Order at 16 (quoting In re Gentiva Sec. Litig., 932 F. Supp. 2d 352,

  380 (E.D.N.Y. 2013)).) Accordingly, plaintiffs’ allegation that Alvarez and

  Cameron are “among an expanded list of 23 suspects” in the Italian government’s

  investigation (FAC ¶¶ 99, 104, 122) is insufficient to support a strong inference of

  scienter. The Third Circuit has affirmed that a government investigation that has

  not resulted in any finding of wrongdoing does not support an inference of scienter.

  See Hertz I, 2017 WL 1536223, at *17 n.6, aff’d sub nom. Hertz II, 905 F.3d 106.

        Plaintiffs claim that “Reuters reviewed emails seized by Italian financial

  police demonstrating that top BT Global Services executives, including Cameron,

  were at the heart of the problem” (FAC ¶ 103), but as discussed below, these

  emails do not contain the particularized facts necessary to support a strong

  inference of scienter under the PSLRA. In the absence of such facts, allegations

  that the Italian government is investigating Alvarez and Cameron are insufficient to

  plead scienter. See Order at 16; Hertz I, 2017 WL 1536223, at *17 n.6.

        Second, allegations that employees felt pressure to meet aggressive financial

  targets, without more, fail to plead scienter. Here, relying on two 2019 Reuters

  articles, plaintiffs allege that Alvarez and Cameron “set unrealistically high

  earnings objectives that could not be met absent accounting manipulations” and

  that these defendants asked BT Italy to “accommodate their requests for specified

  amounts of additional profits that were needed to eliminate shortfalls.” (FAC ¶¶

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