Brown v. Opera Limited

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

────────────────────────────────────

LILIAN LAU and LEON M. BROWN,

20-cv-674 (JGK)

Plaintiffs,

MEMORANDUM OPINION AND

- against - ORDER

OPERA LIMTIED, ET AL.,

Defendants.

────────────────────────────────────

JOHN G. KOELTL, District Judge:

The plaintiffs, Lilian Lau and Leon M. Brown, bring this

putative class action against Opera Limited (“Opera”), its

individual directors, and the financial institutions that

underwrote Opera’s Initial Public Offering (“IPO”) for alleged

material misstatements and omissions. The plaintiffs bring

claims for violations of: (1) Section 10(b) of the Securities

Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78j(b)

and Rule 10b-5, 17 C.F.R. § 240.10b-5; (2) Section 11 of the

Securities Act of 1933 (the “Securities Act”), 15 U.S.C. § 77k;

(3) Section 15 of the Securities Act, 15 U.S.C. § 77o; and

(4) Section 20(a) of the Exchange Act, 15 U.S.C. § 78t. The

alleged misstatements and omissions concern Opera’s market share

with respect to web browser services and its entry into the

financial technology (“fintech”) market. The defendants move to

dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

For the following reasons, the motion to dismiss is granted.

I.

The following facts are drawn from allegations in the

Amended Complaint and are accepted as true for purposes of this

motion to dismiss.

Opera is a limited liability holding company headquartered

in Norway and incorporated in the Cayman Islands. Am. Compl.

¶¶ 7, 48. Defendant Yahui Zhou (“Y. Zhou”) is the Chairman of

the Board and the Chief Executive Officer (“CEO”) of Opera. Am.

Compl. ¶ 49. Defendant Hongyi Zhou (“H. Zhou”), not related to

Y. Zhou, was a Director of Opera at the time of the IPO and

signed or authorized the signing of the Registration Statement

filed with the Securities and Exchange Commission (the “SEC”).

Am. Compl. ¶ 51. Defendant Frode Jacobsen has served as Opera’s

Chief Financial Officer during all relevant times. Am. Compl.

¶ 50. Defendant Han Fang served as a Director of Opera at the

time of Opera’s IPO. Am. Compl. ¶ 52. Defendants Lori Wheeler

Naess and Trond Riiber Knudsen were Directors of Opera at the

time of the IPO. Am. Compl. ¶¶ 53-54. Derrick Nueman was

Opera’s Vice President and head of Investor Relations since

March 11, 2019. Am. Compl. ¶ 113. Lin Song was Opera’s Chief

Operating Officer at all relevant times. Am. Compl. ¶ 112.

Defendants China International Capital Corporation Hong Kong

Securities Limited, Citigroup Global Markets Inc., and Carnegie

AS are investment banks that underwrote the IPO, helped draft

and disseminate the Registration Statement and Prospectus to the

IPO (together, the “Offering Documents”), and shared more than

$9 million in underwriting fees. Am. Compl. ¶ 57. The

plaintiffs are Opera investors who purchased American Depository

Shares (“ADSs”) of Opera. Am. Compl. ¶ 47.

On August 9, 2018, Opera completed its IPO. Am. Compl.

¶ 10. The Registration Statement and Prospectus for the IPO

were submitted to the SEC in June and July 2018 respectively.

Am. Compl. ¶¶ 8-9. In its IPO, Opera issued 9.6 million ADSs

priced at $12.00 per share, raising approximately $115.2

million. Am. Compl. ¶ 10.

According to its Prospectus, Opera was “one of the world’s

leading browser providers.” Am. Compl. ¶ 11. The Prospectus

provided that the number of its browser users, in terms of

monthly active users (“MAUs”), had been increasing year after

year. Am. Compl. ¶ 12. Specifically, the Prospectus stated:

Our mobile browsers, with a global user base of 264.3

million average MAUs in the three months ended March 31,

2018, of which 182.0 million were smartphone users,

compared to 160.0 million smartphone users in the same

period in 2017, are among the market leaders in high

growth regions such as South Asia, Southeast Asia and

Africa in terms of market share, according to

StatCounter.

Am. Compl. ¶ 60. The Prospectus also stated:

Our smartphone user base followed a positive growth

trend across 2016, 2017 and the three months ended March

31, 2018, adding 40.7 million MAUs over the period with

seasonally highest growth in the third and fourth

quarters.

Id. (together, the “IPO Prospectus Market Share Statements”).

The plaintiffs allege that various fillings and statements

that Opera made were misleading because they failed to state

that Opera’s market share was decreasing. According to

StatCounter, an independent web analytics company, in August

2015, Opera’s user base represented 6.57% of the worldwide

market, but at the time of the IPO, Opera’s worldwide market

share was 3.46%. Am. Compl. ¶ 14. StatCounter reported that

between August 2015 and July 2018, Opera’s Africa market share

declined from approximately 40% to about 15.37%. Am. Compl.

¶ 16. Likewise, StatCounter reported that between August 2015

and July 2018, Opera’s Asia market share dropped from 8.12% to

4.11%. Am. Compl. ¶ 18.

According to the Prospectus, about 53% of Opera’s overall

revenue came from browser revenue. Am. Compl. ¶ 20. The

Prospectus also noted that the market for internet and mobile

users, including where Opera competed in Southeast Asia, South

Asia, and Africa, was expected to experience substantial growth.

Hood Decl. Ex. B, Prospectus at 87. Opera’s reported revenue

increased over the relevant period. From 2018 to 2019, Opera’s

overall revenue increased from about $172 million to about $335

million, and its revenue from its “Browser & News” business

increased from about $138 million to about $155 million. Hood

Decl. Ex. I, Press Release at 1, 9. From 2018 to 2019, Opera

also experienced about a 65% increase in net income. Hood Decl.

Ex. J, 2019 Annual Report at 49, 54.

Opera stated in its 2018 Annual Report, published on April

17, 2019, as follows:

Our mobile browsers, with a global user base of 326.7

million average MAUs in 2018, of which 192.6 million

were smartphone users, compared to 168.1 million

smartphone users in 2017, are among the market leaders

in high growth regions such as South Asia, Southeast

Asia and Africa in terms of market share, according to

StatCounter. Our PC browsers, available for both Windows

and macOS platforms, also had a substantial user base of

58.5 million average MAUs in 2018, compared to 48.1

million in 2017.

and

Our smartphone browser user base followed a positive

growth trend across 2016, 2017 and 2018, adding 47.2

million MAUs over that period with seasonally highest

growth in the third and fourth quarters. As we oriented

our marketing and distribution efforts around the new

dedicated Opera News app during 2018, our overall

smartphone user base grew faster than the browser

subset, adding a total of 27.6 million in 2018 alone.

Am. Compl. ¶ 138 (together, the “2018 Annual Report Market Share

Statements”).

In addition to allegedly misleading statements regarding

market share, the plaintiffs allege that the defendants omitted

from its Offering Documents material information concerning

Opera’s entry into the fintech market. The plaintiffs allege

that prior to the IPO, Opera began shifting its focus to fintech

operations in developing countries, but failed to disclose this

shift in the Offering Documents. Am. Compl. ¶ 21. On November

1, 2017, Opera entered into a services agreement with Opay

Digital Services Limited (HK) (“Opay”). Am. Compl. ¶ 22. Opay

was an online payment service provider operating in Africa and

controlled by Y. Zhou, the CEO of Opera. Id. As of December

31, 2017, Opera had a 19.9% ownership share of Opay. Id.

Beginning on March 12, 2018, Opay launched a microlending app in

Kenya called OKash. Am. Compl. ¶ 23. As of March 31, 2018,

Opera had 410 full-time employees, 51 of whom did work for Opay

pursuant to a services agreement between Opera and Opay. Am.

Compl. ¶ 24. On December 19, 2018, Opera acquired OKash from

Opay. Am. Compl. ¶ 23. As of December 31, 2018, Opera employed

464 full-time employees, 89 of whom were dedicated to Opera’s

microlending programs. Am. Compl. ¶ 26. In 2018, Opera derived

1.0% of its total revenue from its fintech operations, and by

2019, Opera derived 38.3% of its total revenue from its fintech

operations. Am. Compl. ¶ 27. The plaintiffs allege that as of

the date of the IPO, Opera was already focused on developing its

microlending operations into a significant source of revenue.

Am. Compl. ¶ 71. In the Prospectus, the defendants disclosed

that Opera held a 19.9% ownership interest in Opay, had provided

certain loans to Opay, and that in 2017 and 2018, Opera entered

into an agreement with Opay to provide it professional services.

Hood Decl. Ex B, Prospectus at 116, F-48; see also Hood Decl.

Ex. A, Registration Statement at Exhibit 10.7.

Specifically, Opera’s Prospectus made the following

disclosure regarding Opay:

Opay Digital Services Limited (HK), or Opay, is our

equity investee which our chief executive officer and

chairman controls through Balder Investment Inc., where

certain of our other officers also have financial

interests but no voting rights. Opay is an online payment

service provider targeting African users. In 2017, we

provided a loan of US$5.6 million to Opay in relation to

its business expansion in Nigeria. In 2018, we provided

a loan of US$0.4 million to Opay in relation to its

business expansion in Kenya. Both loans are interest-

free for the first 60 days and are due and payable upon

notice. We also provided professional services to Opay

and recorded operating revenue of US$2.8 million in

2017. As of March 31, 2018, we had US$5.5 million of

trade receivable and US$1.0 million loan receivable, due

from Opay. Our investment in and relevant transactions

with Opay are in line with our business growth strategy

and we expect to continue investing in Opay as its

business develops.

Am. Compl. ¶ 76 (the “IPO Prospectus Opay Statement”).

Opera’s microlending, primarily OKash, was conducted

through apps available for download on Google Play and other

platforms. Am. Compl. ¶ 29. As of December 2019, Google’s

Android platform held over 84% of the market share for app

platforms in Kenya, over 94% market share in India, and over 79%

of the market share in Nigeria, which were the three geographic

regions where Opera operated its microlending businesses. Id.

Since 2011, Google Play has implemented certain policies

prohibiting predatory lending practices for apps using its

Android platform. Am. Compl. ¶ 30. In July 2016, Google Play

banned ads for payday loans “where repayment is due within 60

days of the date of issue.” Am. Compl. ¶ 31. On August 21,

2019, Google Play banned short-term loan apps. Am. Compl. ¶ 32.

The plaintiffs allege that Opera continued to operate its

microlending apps in violation of Google Play’s policy, but

failed to disclose that fact. Am. Compl. ¶ 36.

On September 20, 2019, Opera completed a Secondary Public

Offering (“SPO”). Am. Compl. ¶ 140. In the Prospectus to the

SPO, Opera disclosed its entry into the fintech business through

its acquisition of OKash. Hood Decl. Ex. F, SPO Prospectus

Supplement, at S-20. Opera also disclosed generic risk factors

associated with its entry into the fintech business, including

credit risks, the risk of payment collection, new and evolving

regulatory regimes, and others. Id. at S-26. Moreover, Opera

made the following statement regarding market share:

We have a massive user base of over 350 million monthly

active users in the quarter ended June 30, 2019 that we

believe provides us with the scale and global reach

necessary to capitalize on market opportunities and

expand our offerings. Our global smartphone user base

was 227 million MAUs, on average, in the quarter ended

June 30, 2019, compared to 182 million MAUs in the second

quarter of 2018. Our mobile browser user base reached

256 million average MAU in 2018, of which 181 million

were smartphone users. Opera is among the market leaders

in high growth mobile-first regions such as Africa and

Asia in terms of market share, according to web traffic

analyst StatCounter. Our PC products also had a

substantial user base of 65 million average MAUs in the

quarter ended June 30, 2019, compared to 57 million in

the second quarter of 2018.

Am. Compl. ¶ 141 (the “SPO Prospectus Market Share Statement”).

The defendants also disclosed its entry into the fintech

business in the SPO Prospectus. Specifically, the SPO

Prospectus stated:

[W]e entered the fintech business with the acquisition

of OKash. . . . [A]dding new products and services

subjects us to additional competition and new

competitors.”

Hood Decl., Ex. F, SPO Prospectus Supplement, at S-20 (the “SPO

Prospectus Fintech Statement”).

On December 9, 2019, Opera participated in the UBS Global

TMT Conference. Am. Compl. ¶ 145. On that call, Derrick

Nueman, Opera’s Vice President and head of Investor Relations,

made the following statement concerning market growth:

Unidentified Analyst:

Yes, yes. No, that makes sense. Well, look, you’ve

touched on the supply of the platform. Give us a sense

of the health of the user base. What is the type of user

base? What are they looking for? And I imagine that it's

going to be pretty different between different parts of

the world.

Derrick L. Nueman - Opera Limited - VP of IR:

Very, very different on geographies. Our overall user

base grew 10% year-over-year in Q3, and that was driven

by growth across all products. I mean, news was the

fastest-growing product. But as I said earlier, browser

grew as well. Seeing growth in all regions. Europe tends

to be a higher-end consumer, somebody who's pretty tech-

savvy, who opt into our browser again because they wanted

privacy and security or they like our gaming browser.

. . .

I mean, look, Africa by far is our best region. Our brand

is everywhere. We have big market share in some of these

countries. Like a place, for example, like Nigeria, we

have close to 50% browser market share. We have multiple

products, you see Opera everywhere. And many Internet

users haven’t used anything other than Opera. They view

Opera as the Internet. Versus in Europe, we have a ton

of users, but there's also a ton of Google users, a ton

of Facebook users. And our brand isn’t as strong, but we

still have opportunities. And a place like Asia is super

competitive. And we tend to say we’re going to compete

more organically versus, say, marketing and

distribution.

Am. Compl. ¶ 146.

Opera also participated in the Needham Growth Conference,

on January 15, 2020, during which Nueman made the following

statement:

I want to go back here to some of the stats that I

referenced earlier. You can see that we’ve grown both on

mobile and PC. Interesting enough, mobile, we’re very

strong in emerging markets, Africa and Asia. And PC,

we're very strong in Europe. Obviously, in a place like

Africa and Asia, there aren’t a lot of PC users given

some of the bandwidth constraints. We have very good

brand awareness in a couple of key markets in Africa. As

an example, in Nigeria, we have close to 50% market

share. And that's important as we launch new products.

Am. Compl. ¶¶ 149-50 (together with the December 9, 2019

statements, the “Analyst Calls Market Share Statements”).

On January 16, 2020, Hindenburg Research, a research firm

that publishes reports regarding publicly-traded companies,

published a report concluding that Opera’s browser market share

was declining, and that Opera was involved in predatory short-

term loans in Africa and India, deploying deceptive tactics,

charging interest rates between 365% and 876%. Am. Compl. ¶ 37.

The report also asserted that the apps were in violation of

Google Play’s terms and conditions. Id. According to the

Report, by January 2020, Opera’s browser market share was down

about 30% since its IPO. Am. Compl. ¶ 38. The day before the

Hindenburg report was published, on January 15, 2020, Opera’s

ADS closing price was $9.02 per ADS. Am. Compl. ¶ 42. The day

of the report, at the close of January 16, 2020, the price fell

to $7.33, and at the close of January 17, 2020, the price fell

to $7.06. Id.

II.

In deciding a motion to dismiss pursuant to Rule 12(b)(6),

the allegations in the complaint are accepted as true, and all

reasonable inferences must be drawn in the plaintiffs’ favor.

McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir.

2007).1 The Court’s function on a motion to dismiss is “not to

weigh the evidence that might be presented at a trial but merely

to determine whether the complaint itself is legally

sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.

1985). The Court should not dismiss the complaint if the

plaintiffs have stated “enough facts to state a claim to relief

that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550

1 Unless otherwise noted, this Memorandum Opinion and Order omits all

alterations, citations, footnotes, emphasis, and internal quotation marks in

quoted text.

U.S. 544, 570 (2007). “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009).

A claim under Section 10(b) of the Exchange Act sounds in

fraud and must meet the pleading requirements of Rule 9(b) of

the Federal Rules of Civil Procedure and of the Private

Securities Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u–

4(b). A securities fraud complaint based on misstatements must

“(1) specify the statements that the plaintiff[s] contend[ ]

were fraudulent, (2) identify the speaker, (3) state where and

when the statements were made, and (4) explain why the

statements were fraudulent.” ATSI Commc’ns, Inc. v. Shaar

Fund, Ltd., 493 F.3d 87, 99 (2d Cir. 2007). The PSLRA similarly

requires that the complaint “specify each statement alleged to

have been misleading [and] the reason or reasons why the

statement is misleading,” and it adds the requirement that “if

an allegation regarding the statement or omission is made on

information and belief, the complaint shall state with

particularity all facts on which that belief is formed.” 15

U.S.C. § 78u–4(b)(1); ATSI, 493 F.3d at 99.

While the Court should construe the factual allegations in

the light most favorable to the plaintiffs, “the tenet that a

court must accept as true all of the allegations contained in

the complaint is inapplicable to legal conclusions.” Iqbal, 556

U.S. at 678. When presented with a motion to dismiss pursuant

to Rule 12(b)(6), the Court may consider documents that are

referenced in the complaint, documents that the plaintiffs

relied on in bringing suit and that are either in the

plaintiffs’ possession or that the plaintiffs knew of when

bringing suit, or matters of which judicial notice may be taken.

See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.

2002). The Court can take judicial notice of public disclosure

documents that must be filed with the SEC and documents that

both “bear on the adequacy” of SEC disclosures and are “public

disclosure documents required by law.” Kramer v. Time Warner,

Inc., 937 F.2d 767, 773–74 (2d Cir. 1991); see also Plumbers &

Pipefitters Nat’l Pension Fund v. Orthofix Int’l N.V., 89 F.

Supp. 3d 602, 607–08 (S.D.N.Y. 2015); Silsby v. Icahn, 17 F.

Supp.3d 348, 353–54 (S.D.N.Y. 2014), aff’d sub nom., Lucas v.

Icahn, 616 F. App’x 448 (2d Cir. 2015).

III.

The plaintiffs bring claims for violations of: (1) Section

10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, 17

C.F.R. § 240.10b-5; (2) Section 11 of the Securities Act, 15

U.S.C. § 77k; (3) Section 15 of the Securities Act, 15 U.S.C.

§ 77o; and (4) Section 20(a) of the Exchange Act, 15 U.S.C.

§ 78t.

A. Alleged Misstatements and Omissions

Claims brought pursuant to Section 11 of the Securities Act

and Section 10(b) of the Exchange Act require the plaintiff to

plead a material misstatement or omission. See In re Morgan

Stanley Info. Fund Sec. Litig., 592 F.3d 347, 360 (2d Cir.

2010); Lattanzio v. Deloitte & Touche LLP, 476 F.3d 147, 153 (2d

Cir. 2007). A misrepresentation or omission is material if

there is a substantial likelihood that a reasonably prudent

investor would consider it important in making a decision. See

Basic Inc. v. Levinson, 485 U.S. 224, 231 (1988); TSC Indus.,

Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976) (“[T]here must

be a substantial likelihood that the disclosure of the omitted

fact would have been viewed by the reasonable investor as having

significantly altered the ‘total mix’ of information made

available.”); Feinman v. Dean Witter Reynolds, Inc., 84 F.3d

539, 540–41 (2d Cir. 1996).

Generally, materiality is a mixed question of law and fact

ordinarily left to the finder of fact to determine. TSC, 426

U.S. at 450. The question of materiality may be decided as a

matter of law on a motion to dismiss if the alleged misstatement

or omission is “so obviously unimportant to a reasonable

investor that reasonable minds could not differ on the question

of [its] importance.” Feinman, 84 F.3d at 540–41. “The central

inquiry in determining whether a prospectus is materially

misleading . . . is therefore whether defendants’

misrepresentations, taken together and in context, would have

[misled] a reasonable investor about the nature of the

investment.” I. Meyer Pincus & Assocs., P.C. v. Oppenheimer &

Co., 936 F.2d 759, 761 (2d Cir. 1991).

“A[n] omission is actionable under federal securities laws

only when the [defendant] is subject to a duty to disclose the

omitted facts.” In re Time Warner Inc. Sec. Litig., 9 F.3d 259,

267 (2d Cir. 1993). While in some circumstances, parties have

no duty to disclose information, once a party chooses to speak,

it has a “duty to be both accurate and complete.” Caiola v.

Citibank, N.A., 295 F.3d 312, 331 (2d Cir. 2002). “[A]n

entirely truthful statement may provide a basis for liability if

material omissions related to the content of the statement make

it . . . materially misleading.” In re Bristol Myers Squibb Co.

Sec. Litig., 586 F. Supp. 2d 148, 160 (S.D.N.Y. 2008); see also

City of Roseville Employees’ Ret. Sys. v. EnergySolutions, Inc.,

814 F. Supp. 2d 395, 410 (S.D.N.Y. 2011). However, corporations

are “not required to disclose a fact merely because a reasonable

investor would very much like to know that fact.” In re Time

Warner, 9 F.3d at 267; see also In re Vivendi, S.A. Sec. Litig.,

838 F.3d 223, 239-40 (2d Cir. 2016); In re Bank of Am. AIG

Disclosure Sec. Litig., 980 F. Supp. 2d 564, 575 (S.D.N.Y.

2013), aff’d, 566 F. App’x 93 (2d Cir. 2014).

The statements at issue in this case are the IPO Prospectus

Market Share Statements, the IPO Prospectus Opay Statement, the

2018 Annual Report Market Share Statements, the SPO Prospectus

Market Share Statement, the SPO Prospectus Fintech Statement,

and the Market Share Statements in the Analyst Calls. The

plaintiffs assert two general types of claims: (1) certain

statements are materially misleading because they allegedly

misrepresent Opera’s market share and growth; and (2) certain

statements omit material information about Opera’s entry into

the fintech market. The plaintiffs contend that only the

Analyst Calls Market Share Statements contain factually

inaccurate information, and that the basis for liability for the

remaining statements stems from omissions rendering the

statements materially misleading.

The plaintiffs first contend that Opera’s market share was

declining, and that the decline was likely to affect annual

revenue. According to the plaintiffs, the defendants had a duty

to disclose the decline in market share pursuant Item 303 of

Regulation S-K. This is especially true, the plaintiffs argue,

because Opera’s prospectuses identified Opera as a market

leader. Item 303 of Regulation S-K, in part, requires the

defendants to disclose “known trends or uncertainties that have

had or that the registrant reasonably expects will have a

material favorable or unfavorable impact on net sales or

revenues or income from continuing operations.” 17 C.F.R.

§ 229.303(a)(3)(ii). Item 303 “imposes a disclosure duty where

a trend, demand, commitment, event or uncertainty is both

(1) presently known to management and (2) reasonably likely to

have material effects on the registrant’s financial condition or

results of operations.” Panther Partners Inc. v. Ikanos

Commc’ns, Inc., 681 F.3d 114, 120 (2d Cir. 2012).

In this case, Opera’s reported annual “Browser & News

revenue” increased from 2018 to 2019. Hood Decl. Ex. J, 2019

Annual Report at 49; Ex. I, February 25, 2020 Press Release, at

2. The plaintiffs do not contest Opera’s reported annual

revenue figures. As the defendants point out, loss of market

share does not necessarily imply a loss of revenue when the

market is rapidly growing. The defendants disclosed that the

markets where they were competing were expanding rapidly, and

therefore the decrease in market share does not imply that it

would be reasonably likely that Opera would suffer a decrease in

revenue. And the plaintiffs do not contend that Opera’s

statement that it added 40.7 million MAUs was false. In fact,

Opera’s reported revenue and net income increased while its

share of the total browser market share was declining. See

Stadnick v. Vivint Solar, Inc., 861 F.3d 31, 39 (2d Cir. 2017)

(no obligation under Item 303 to disclose decline of market

share in a particular region where there was no evidence of a

decline in revenues).

Moreover, the statements at issue concerned mobile user

statistics, but the plaintiffs object that the defendants did

not disclose Opera’s declining market share of the total browser

user base, which includes mobile users and PC users. However,

the defendants did not make any representations in the Offering

Documents that it was a market leader in terms of market share

for the total user base; the defendants cabined the statements

to market share of mobile users. Therefore, the fact that Opera

experienced a decline in market share for the total user base is

even more tenuously related to the statements in the Offering

Papers and the 2018 Annual Report, and the plaintiffs have not

shown that the decrease in market share of the total browser

market would have been likely to negatively affect revenue.

Accordingly, the plaintiffs cannot show an Item 303 violation

because they have failed to plead adequately that Opera suffered

or would have been likely to suffer a decline in revenue. See,

e.g., Holbrook v. Trivago, N.V., 2019 WL 948809, at *12-14

(S.D.N.Y. Feb. 26, 2019), aff’d sub nom., Shetty v. Trivago

N.V., 796 F. App’x 31 (2d Cir. 2019).

Furthermore, as the defendants contend, the defendants’

statements about Opera’s market share could not be material

because the “truth” was publicly available. See White v. H&R

Block, Inc., 2004 WL 1698628, at *12 (S.D.N.Y. July 28, 2004)

(noting that courts in this Circuit recognize the “truth-on-the-

market” defense). Alleged misstatements are not material where

the truth was fully disclosed or concerned a matter of public

knowledge. See, e.g., id.; Rubenstein v. Credit Suisse Grp. AG,

No. 19-cv-1069 2020 WL 2036850, at *6 (S.D.N.Y. Apr. 28, 2020);

Colbert v. Rio Tinto PLC, 392 F. Supp. 3d 329, 339–40 (S.D.N.Y.

2019); Monroe Cnty. Emps. Ret. Syst. v. YPF Sociedad Anonima, 15

F. Supp. 3d 336, 355–56 (S.D.N.Y. 2014); In re

IAC/InterActiveCorp Sec. Litig., 695 F. Supp. 2d 109, 118, 122

(S.D.N.Y. 2010). “Although the underlying philosophy of federal

securities regulation is that of full disclosure, there is no

duty to disclose information to one who reasonably should be

aware of it.” Seibert v. Sperry Rand Corp., 586 F.2d 949, 952

(2d Cir. 1978). “Where allegedly undisclosed material

information is in fact readily accessible in the public

domain, . . . a defendant may not be held liable for failing to

disclose this information.” In re KeySpan Corp. Sec. Litig.,

383 F.Supp.2d 358, 377 (E.D.N.Y. 2003); see also In re Merrill

Lynch & Co., Inc. Research Reports Sec. Litig., 272 F.Supp.2d

243, 249–250 (S.D.N.Y. 2003) (“[T]he Defendants cannot be held

liable for failing to disclose . . . publicly available

information.”).

The plaintiffs allege that, according to the information on

StatCounter, the defendants’ statements were false or

misleading. However, in its public statements, the defendants

directed readers to StatCounter for more complete information.

Therefore, the statements cannot be misleading when the

defendants directed readers to the complete statistics available

on StatCounter. Moreover, the defendants contested, and the

plaintiffs do not dispute, that the information was publicly

available free of charge. The plaintiffs cite to Staehr v.

Hartford Financial Services for the proposition that the

plaintiffs cannot be charged with the knowledge or duty to

investigate Opera’s market share from obscure or minimally

reported sources. See 547 F.3d 406, 427-28 (2d Cir. 2008). In

this case, the very statements that the plaintiffs contend are

misleading directed investors to StatCounter. For each alleged

misstatement about market share, a diligent investor would have

seen the data as reported by StatCounter, undercutting the

plaintiffs’ argument that the alleged misstatements were

material.

Moreover, to the extent that the plaintiffs complain about

statements concerning being a market leader, courts have long

understood such statements to constitute corporate puffery.

Such statements are “no more than puffery which [do] not give

rise to securities violations,” because they are “too general to

cause a reasonable investor to rely upon them.” ECA & Local 134

IBEW Joint Pension Trust of Chicago v. JP Morgan Chase Co., 553

F.3d 187, 205–06 (2d Cir. 2009). Statements are general puffery

when they are “too general to cause a reasonable investor to

rely upon them” or “merely generalizations regarding [a

company]’s business practices.” Id. at 206. The statements

about Opera’s growth and being a market leader are corporate

optimism more appropriately described as puffery. See, e.g., In

re Nokia Oyj (Nokia Corp.) Sec. Litig., 423 F. Supp. 2d 364,

395-97 (S.D.N.Y. 2006) (holding that optimistic statements about

growth were puffery). To the extent that the statements gave

more specific assertions, those statements directed investors to

StatCounter, where the investors could find the complete

information. Therefore, apart from the Analyst Calls Market

Share Statements, which include specific data about Opera’s

market share in Nigeria without referring investors to

StatCounter, Opera’s statements relating to market share are not

materially misleading.2

The plaintiffs next contend that Opera’s Offering Documents

in connection with the IPO were misleading because they failed

to disclose Opera’s entry into the fintech market. Item 101 of

Regulation S-K requires the defendants to disclose “the general

2 As described below, the plaintiffs still fail to state a Section 10(b) claim

with respect to the Analyst Calls Market Share Statements because they fail

to plead any facts giving rise to an inference of scienter.

development of the business of the registrant, its subsidiaries,

and any predecessor(s)” including “any material changes in the

mode of conducting the business.” 17 C.F.R. § 229.101. Item

105 of Regulation S-K requires the defendants to provide “a

discussion of the material factors that make an investment in

the registrant or offering speculative or risky.” 17 C.F.R.

§ 229.105. When the omitted information concerns a contingent

or speculative event, “the materiality of those events depends

on a balancing of both the indicated probability that the event

will occur and the anticipated magnitude of the event in light

of the totality of the company activity.” Castellano v. Young &

Rubicam, Inc., 257 F.3d 171, 180 (2d Cir. 2001); see also In re

Alliance Pharmaceutical Corp. Sec. Litig., 279 F. Supp. 2d 171,

196 (S.D.N.Y. 2003). Future plans need to be disclosed when

they “are under active and serious consideration.” In re Time

Warner, 9 F.3d at 268; see also San Leandro Emergency Medical

Group Profit Sharing Plan v. Philip Morris, Co., Inc., 75 F.3d

801, 810-11 (2d Cir. 1996); Bratusov v. Comscore, Inc., No. 19-

cv-3210, 2020 WL 3447989, at *10-11 (S.D.N.Y. June 24, 2020); In

re Cosi, Inc. Sec. Litig., 379 F. Supp. 2d 580, 587 (S.D.N.Y.

2005).

The plaintiffs have failed to allege adequately a violation

of Item 101 because the plaintiffs do not allege adequately that

Opay was a subsidiary of Opera or that Opera itself entered into

the fintech market at the time Opera published its Offering

Documents or completed its IPO. Item 101 only requires

disclosure for the “registrant, its subsidiaries, and any

predecessor(s).” 17 C.F.R. § 229.101. Opera disclosed that it

held a minority interest in Opay, that Opay was controlled by

Opera’s Chairman and Chief Executive Officer, that Opay

conducted microlending, that Opera provided services to Opay

pursuant to a services agreement, and that Opera provided loans

to Opay. While Opera did have a minority share in Opay, Opera

would need a controlling interest of Opay for it to be

considered a subsidiary of Opera. See 17 C.F.R. § 240.12b–2

(Exchange Act Rule 12b-2 defines “subsidiary” as “an affiliate

controlled by such person directly, or indirectly through one or

more intermediaries”); Subsidiary Corporation, Black’s Law

Dictionary (11th ed. 2019) (“A corporation in which a parent

corporation has a controlling share.”). While an entity could

be considered a “subsidiary” where the parent entity has a

controlling interest with less than a 50% ownership share, the

plaintiffs have not pleaded enough facts in the operative

complaint to make a plausible allegation that Opay was a

subsidiary of Opera. Because the plaintiffs have failed to

plead adequately that Opay was Opera’s subsidiary, the

defendants did not have an obligation, pursuant to Item 101, to

disclose the general business development of Opay. Therefore,

the fact that the defendants did not disclose the specific

details about Opay’s lending business cannot constitute a

material omission because Opera had no duty to disclose that

information.

The plaintiffs contend that Opera itself entered into the

fintech market by virtue of its relationship with Opay, or at

least should have disclosed its plans to engage in fintech

imminently. Item 101 requires a corporation to “[d]escribe the

business done and intended to be done by the registrant and its

subsidiaries, focusing upon the registrant’s dominant segment or

each reportable segment about which financial information is

presented in the financial statements.” 17 C.F.R.

§ 229.101(c)(1). However, the plaintiffs have failed to allege

adequately that Opera entered the fintech business before it

acquired OKash in December 2018, after Opera’s IPO in August

2018, or had plans to enter the fintech market imminently. The

plaintiffs’ allegations are insufficient to show that the

defendants had a duty to disclose its future entry into the

fintech market at the time of the IPO. See, e.g., In re

Centerline Holding Co., 380 F. App’x 91, 94 (2d Cir. 2010)

(affirming dismissal of securities claims where the defendants

did not have a duty to disclose future plans); In re Cosi, 379

F. Supp. 2d at 586-88 (dismissing securities claims where the

defendants did not have a duty to disclose future business

plans).3 While Opera had a minority interest in Opay, a services

agreement with Opay, and provided loans to Opay, those

allegations are insufficient to show that Opera was going to

engage imminently in the fintech market. The extent of the

relationship between Opera and Opay, as it existed at the time,

was disclosed in Opera’s Offering Documents. And to the extent

that the plaintiffs rely on events occurring after Opera’s IPO,

the defendants plainly had no obligation or ability to disclose

those events in the Offering Documents. See Novak v. Kasaks,

216 F.3d 300, 309 (2d Cir. 2000) (“[A]llegations that the

defendants should have anticipated future events and made

certain disclosures earlier than they actually did do not

suffice to make out a claim of securities fraud.”).

Additionally, the defendants did disclose that Opera intended to

continue investing in and working with Opay. Specifically, the

IPO Prospectus Opay Statement provided that Opera “expect[ed] to

continue investing in Opay as its business develops.” Am.

Compl. ¶ 76. Accordingly, the defendants did disclose Opera’s

intention to continue working with Opay as Opay developed its

fintech business, and the plaintiffs have failed to plead

adequately a material omission with respect to Opera’s entry

into the fintech market.

3 The defendants did disclose Opera’s entry into the fintech market in the SPO

Prospectus Fintech Statement.

Similarly, Opera could not have disclosed the risk from

Google Play’s policy regarding predatory lending in its Offering

Documents because Google Play implemented that policy after the

IPO. When Google Play had changed its policies, Opera disclosed

those risks at that time. Specifically, in the SPO Prospectus,

Opera stated as follows:

If any of these third-party channel providers [including

Google Play] delivers unsatisfactory services, engages in

fraudulent action, or is unable or refuses to continue to

provide its services to us and our users for any reason, it

may materially and adversely affect our business, financial

condition and results of operations.

Hood Decl. Ex. E, SPO Prospectus, at S-26.

Therefore, the plaintiffs’ argument that Opera’s failure to

disclose the risks of the fintech business constituted a

violation of Item 105 is unavailing. The defendants did

disclose certain risks in Opera’s investment in Opay, and when

Opera did enter into the fintech market, the defendants

disclosed that fact in the SPO Prospectus Fintech Statement.

Moreover, the defendants disclosed the risks of its entry into

the fintech market in its Prospectus to the SPO based on “new

and evolving” regulatory regimes, as well as other risks

associated with its entry into the fintech market, including the

risk that Google Play would cease providing its services to

Opera. Accordingly, the plaintiffs have failed to allege

adequately that the defendants violated a duty to disclose

Opera’s entry into the fintech market pursuant to Items 101 and

105.

Therefore, the plaintiffs have failed to state adequately,

pursuant to the plaintiffs’ Section 10(b) and Section 11 claims,

that the defendants made material misstatements or omissions in

the IPO Market Share Statements, the IPO Opay Statement, the

2018 Annual Report Statements, the SPO Prospectus Market Share

Statement, and the SPO Prospectus Fintech Statement.

B. Section 10(b)

Section 10(b), as effectuated by Rule 10b-5, makes it

“unlawful for any person . . . [t]o make any untrue statement of

a material fact or to omit to state a material fact necessary in

order to make the statements made, in the light of the

circumstances under which they were made, not misleading.” 17

C.F.R. § 240.10b-5(b). To state a claim under Section 10(b) and

Rule 10b-5, the plaintiffs must allege that the defendants, in

connection with the purchase or sale of securities, made a

materially false statement or omitted a material fact, with

scienter, and that the plaintiffs’ reliance on the defendants’

action caused injury to the plaintiffs. Ganino v. Citizens

Utils. Co., 228 F.3d 154, 161 (2d Cir. 2000); see also City of

Roseville, 814 F. Supp. 2d at 409. With the possible exception

of statements with respect to market share that Nueman made in

the Analyst Calls, the Section 10(b) claims fail because the

plaintiffs have failed to plead that Opera made any false or

misleading statements. The Section 10(b) claims also fail

because the plaintiffs have failed to plead adequately scienter

and loss causation.

1. Scienter

The defendants argue that the plaintiffs have failed to

plead a strong inference of scienter for any of the Section

10(b) claims. The scienter required to support a securities

fraud claim can be “intent to deceive, manipulate, or defraud,

or at least knowing misconduct.” SEC v. First Jersey Sec.,

Inc., 101 F.3d 1450, 1467 (2d Cir. 1996). The PSLRA requires

that a complaint alleging securities fraud “state with

particularity facts giving rise to a strong inference that the

defendant[s] acted with the required state of mind.” 15 U.S.C.

§ 78u-4(b)(2). A “strong inference” of scienter can arise from

(1) facts showing that a defendant had “both motive and

opportunity to commit the fraud,” or (2) facts that constitute

“strong circumstantial evidence of conscious misbehavior or

recklessness.” ATSI, 493 F.3d at 99; see also City of

Roseville, 814 F. Supp. 2d at 418-19 (same). In order to plead

scienter adequately, the plaintiffs must allege facts supporting

a strong inference with respect to each defendant. See Plumbers

& Pipefitters Local Union No. 630 Pension-Annuity Trust Fund v.

Arbitron Inc., 741 F. Supp. 2d 474, 488 (S.D.N.Y. 2010). “[I]n

determining whether the pleaded facts give rise to a strong

inference of scienter, the court must take into account

plausible opposing inferences.” Tellabs, Inc. v. Makor Issues &

Rights, Ltd., 551 U.S. 308, 323 (2007). A complaint

sufficiently alleges a strong inference of scienter when “a

reasonable person would deem the inference of scienter cogent

and at least as compelling as any opposing inference one could

draw from the facts alleged.” Id. at 324; see also Slayton v.

Am. Express Co., 604 F.3d 758, 766 (2d Cir. 2010); Silsby, 17 F.

Supp. 3d at 364-65. Courts conduct the scienter analysis

holistically to determine whether “all of the facts alleged,

taken collectively, give rise to a strong inference of

scienter.” Tellabs, Inc., 551 U.S. at 322-23.

The plaintiffs first assert that the defendants knew or

deliberately disregarded market share data in making statements

about Opera’s being a market leader. “[W]here plaintiffs

contend defendants had access to contrary facts, they must

specifically identify the reports or statements containing this

information” to support an inference of scienter. Teamsters

Local 445 Freight Div. Pension Fund v. Dynex Capital Inc., 531

F.3d 190, 196 (2d Cir. 2008). Moreover, the information

contained in those reports must be non-public. See In re

Scholastic Corp. Sec. Litig., 252 F.3d 63, 76 (2d Cir. 2001);

see also In re GeoPharma, Inc. Sec. Litig., 399 F. Supp. 2d 432,

452 (S.D.N.Y. 2005) (“Cases in this Circuit assume that the

contradictory information in question must be non-public.”).

In this case, the defendants specifically referred

investors to StatCounter. As such, the plaintiffs cannot allege

adequately that the defendants had access to facts contrary to

what they stated, namely data from StatCounter, because the very

statements in question referred to the information on

StatCounter. Moreover, the plaintiffs cannot assert that the

defendants disregarded that information, because the allegedly

misleading statements refer to StatCounter. Further, it would

not be plausible that the defendants deliberately attempted to

mislead investors by referring them to the very sources that

would allegedly disclose the misleading nature of the

statements. And while the plaintiffs contend that Opera’s

market share of the total user base was declining, the

statements at issue in this case concern Opera’s market share of

mobile users. The plaintiffs have failed to allege adequately

that the statements were misleading when viewed in the context

of the mobile market, and the plaintiffs’ argument that the

defendants should have nonetheless included that their market

share of the total user base was declining is unavailing.

Accordingly, the plaintiffs have failed to plead adequately an

inference of scienter with respect to the IPO Prospectus Market

Share Statements, the 2018 Annual Report Market Share

Statements, and the SPO Prospectus Market Share Statement.

The plaintiffs also assert that Nueman made two

misstatements during analyst calls with respect to Opera’s

market share in Nigeria. However, the plaintiffs have failed to

allege any facts leading to an inference of scienter with

respect to the Analyst Calls Market Share Statements.4 It is not

plausible, much less indicative of a strong inference of

scienter, that Nueman would consciously or recklessly misstate

market share statistics that were publicly available on

StatCounter when Opera repeatedly referred the public to

StatCounter for the statistics on market share. When plaintiffs

fail to allege facts giving rise to an inference of scienter,

the plaintiffs’ Section 10(b) claims must be dismissed. See,

e.g., Wilson v. Dalene, 699 F. Supp. 2d 534, 559 (E.D.N.Y.

2010); In re Gildan Activewear, Inc. Sec. Litig., 636 F. Supp.

2d 261, 273 (S.D.N.Y. 2009). Because the plaintiffs failed to

allege any facts sufficient to infer scienter with respect to

4 The plaintiffs contend that the Analyst Calls Market Share Statements were

factually inaccurate because the statements that Opera had close to a 50%

market share in Nigeria appeared to refer to market share of total user base.

The defendants contend that the 50% market share claim was related to market

share of mobile users, and were an accurate description of market share in

that market. This is a factual issue that cannot be decided on a motion to

dismiss. In any event, the Analyst Market Share Statements are not

actionable as pleaded because the plaintiffs have failed to allege a strong

inference of scienter.

the Analyst Calls Market Share Statements, the Section 10(b)

claims with respect to those statements must be dismissed.

The plaintiffs also fail to plead scienter sufficiently

with respect to the alleged omissions in the IPO Prospectus Opay

Statement regarding Opera’s entry into the fintech market at the

time of Opera’s IPO. First, the plaintiffs fail to point to any

specific reports or contrary information that the defendants

failed to disclose, beyond speculation about mere abstract plans

that Opera was considering entering the fintech market which are

not specifically identified. Second, the defendants did

disclose that Opera had provided Opay loans, that Opera executed

a services agreement Opay, and that Opera held a minority

interest in Opay. The plaintiffs have not alleged that there

was anything more concrete to disclose at the time of the IPO,

apart from what the defendants in fact disclosed. The extent of

the disclosures in the IPO Prospectus undercuts the plaintiffs’

arguments that the defendants failed to disclose any information

with fraudulent intent.

To show scienter with respect to the alleged omissions

concerning Opera’s entry into the fintech market, the plaintiffs

point to the existence of other litigation. Opera’s CEO, Y.

Zhou, was a director of Qudian, a company not affiliated with

Opera. Qudian shareholders sued Y. Zhou and others alleging a

failure to disclose that Qudian entered a materially different

business line. See Am. Compl. ¶¶ 165-69; see also In re Qudian

Inc. Sec. Litig., 17-cv-9741, ECF No. 134, Consolidated Second

Amended Complaint, (S.D.N.Y. July 27, 2018). The plaintiffs

allege that because the allegations in the Qudian case and in

this case both amount to a failure of the defendants to disclose

an entry into a new line of business, the Qudian litigation

provides support for the scienter allegation in this case. In

the Qudian litigation, however, there has not been an

adjudication on the merits and unproven allegations in another

case provide no support for an inference of scienter in this

case. See, e.g., RSM Prod. Corp. v. Fridman, 643 F. Supp. 2d

382, 403 (S.D.N.Y. 2009), aff’d, 387 F. App’x 72 (2d Cir. 2010).

Indeed, many of the plaintiffs’ claims in Qudian were dismissed,

See In re Qudian Inc. Sec. Litig., 2019 WL 4735376 (S.D.N.Y.

Sept. 27, 2019), and the case is in the process of being settled

without an adjudication on the merits. See In re Qudian Inc.

Sec. Litig., 17-cv-9741, ECF No. 228, Preliminary Approval

Order, (S.D.N.Y. Nov. 16, 2020).

The plaintiffs have also failed to plead that there was a

motive for the allegedly false statements. The plaintiffs

assert an inference of scienter with respect to all statements

because, as alleged by the plaintiffs, a portion of the IPO and

SPO proceeds were used by Opera in transactions with entities

that were controlled by Y. Zhou and H. Zhou. See Am. Compl.

¶¶ 170-73. Based on this, the plaintiffs assert that the

defendants had a motive to deceive Opera’s investors. An

inference of scienter is supported based on the motive theory

when the plaintiffs allege that the defendants “benefitted in

some concrete and personal way from the purported fraud.”

Novak, 216 F.3d at 311. “[T]he particular fraud alleged must

specifically enable the schemes or business plans plaintiffs

contend conferred concrete and personal benefits on the

defendants.” Glaser v. The9 Ltd., 772 F. Supp. 2d 573, 586

(S.D.N.Y. 2011). Alleging related-party transactions, without

any unique connection between alleged fraud and the

transactions, is insufficient for an inference of scienter. Id.

at 592.

In this case, the plaintiffs have failed to allege a unique

connection between the alleged fraud and the related-party

transactions. While the plaintiffs assert that the defendants

raised money from the IPO and SPO that was later used in

related-party transactions, some of the transactions that

occurred were disclosed in the IPO Prospectus and occurred

before the IPO. See Hood Decl. Ex. B, Prospectus at 115-16.

With respect to the transactions that occurred after the public

offerings, the plaintiffs do not allege that the terms of the

related-party transactions were unfavorable to Opera or Opera’s

shareholders. The plaintiffs have failed to allege how Y. Zhou

and H. Zhou enriched themselves at the expense of Opera and

Opera’s shareholders. Merely noting that the defendants raised

capital from the public offerings, and then used that capital in

future related-party transactions, is insufficient, without

more, to allege a strong inference of scienter. Therefore, the

related-party transactions, as alleged in the Amended Complaint,

are insufficient to support a strong inference of scienter.

The plaintiffs’ allegations taken together fail to support

a strong inference of scienter with respect to any of the

alleged misstatements and omissions, and therefore, all of the

plaintiffs’ Section 10(b) claims must be dismissed.

2. Loss Causation

The defendants argue that the plaintiffs have failed to

plead that the alleged misrepresentations and omissions caused

the plaintiff’s loss. To allege loss causation under Section

10(b) and Rule 10b–5, the plaintiffs must provide in the

complaint “notice of what the relevant economic loss might be

and what the causal connection might be between that loss and

the misrepresentation.” Dura Pharms., Inc. v. Broudo, 544 U.S.

336, 347 (2005). The plaintiffs must allege that the

misrepresentation or omission proximately caused the plaintiffs’

economic loss. Id. at 346. To provide the requisite notice,

the plaintiffs must plead economic loss and either “that the

loss was foreseeable and caused by the materialization of the

risk concealed by the fraudulent statement,” ATSI, 493 F.3d at

107, or “that the misstatement or omission concealed something

from the market that, when disclosed, negatively affected the

value of the security.” Lentell v. Merrill Lynch & Co., 396

F.3d 161, 173 (2d Cir. 2005); see also Carpenters Pension Tr.

Fund of St. Louis v. Barclays PLC, 750 F.3d 227, 232-33 (2d Cir.

2014); In re New Oriental Educ. & Tech. Grp. Sec. Litig., 988 F.

Supp. 2d 406, 428 (S.D.N.Y. 2013). “[P]artial disclosures can

satisfy the loss causation requirement.” Freudenberg v. E*Trade

Fin. Corp., 712 F. Supp. 2d 171, 202 (S.D.N.Y. 2010).

To show loss causation, a corrective disclosure must

“purport[] to reveal some then-undisclosed fact with regard to

the specific misrepresentations alleged in the complaint.” See

In re Omnicom Grp., Inc. Sec. Litig., 597 F.3d 501, 511 (2d Cir.

2010). Already-public information cannot constitute a

corrective disclosure for purposes of alleging loss causation.

See id. at 511-12; see also Fila v. Pingtan Marine Enter. Ltd.,

195 F. Supp. 3d 489, 496 (S.D.N.Y. 2016) (holding that the

plaintiffs could not allege loss causation “based solely on

public information”).

In this case, the alleged corrective disclosure at issue is

the Hindenburg report. However, that report contained an

analysis of publicly available information. The Hindenburg

report cited market share data obtained from StatCounter.

Opera’s disclosures referred investors to that same data in the

Prospectus to the IPO, the 2018 Annual Report, and the

Prospectus to the SPO. Therefore, the Hindenburg report cannot

constitute a corrective disclosure sufficient to allege loss

causation because it merely analyzed the public data to which

the defendants directed investors. See, e.g., Cent. States, Se.

& Sw. Areas Pension Fund v. Fed. Home Loan Mortg. Corp., 543 F.

App’x 72, 74-75 (2d Cir. 2013) (“[T]he cited third-party

articles and reports [that] expressed negative opinions about

[the defendant’s] solvency based on information that was already

publicly available . . . are not corrective for the purpose of

pleading loss causation.”). Accordingly, the plaintiffs have

failed to allege adequately loss causation with respect to the

statements concerning Opera’s market share. For the same

reasons, the Hindenburg report cannot serve as a corrective

disclosure for Opera’s entry into the fintech market. In

February 2019, Opera disclosed its acquisition of OKash in a

press release. That disclosure came almost a year before the

Hindenburg report was published in January 2020, and the

plaintiffs have not alleged that the Hindenburg report relied on

any non-public information with respect to Opera’s participation

in the fintech market.

C. Section 11

In addition to the fact that the Section 11 claims fail

because the plaintiffs have failed to show a material

misstatement in the Offering documents, the Section 11 claims

also fail because the claims are untimely and the defendants

have shown that the alleged misstatements did not cause the

plaintiffs’ alleged loss.

Section 11(a) of the Securities Act provides that any

signatory to a Registration Statement, director of the issuer of

securities, or underwriter with respect to such securities,

among others, may be held liable to purchasers of registered

securities if the Registration Statement contains “an untrue

statement of a material fact or omitted to state a material fact

required to be stated therein or necessary to make the

statements therein not misleading.” 15 U.S.C. § 77k(a).

Section 11 imposes “a stringent standard of liability on the

parties who play a direct role in a registered offering.”

Herman & MacLean v. Huddleston, 459 U.S. 375, 381-82 (1983); see

also In re Flag Telecom Holdings, Ltd. Secs. Litig., 618 F.

Supp. 2d 311, 321 (S.D.N.Y. 2009). To establish a prima facie

claim under Section 11, “[a] plaintiff need only plead a

material misstatement or omission in the registration

statement.” In re Flag Telecom Holdings, Ltd. Secs. Litig., 411

F. Supp. 2d 377, 382 (S.D.N.Y. 2006), abrogated on other

grounds, 574 F.3d 29 (2d Cir. 2009). Under Section 11,

“[l]iability against the issuer of a security is virtually

absolute, even for innocent misstatements,” while “[o]ther

defendants bear the burden of demonstrating due diligence.”

Herman & MacLean, 459 U.S. at 382.

1. Statute of Limitations

Section 11 requires that claims be brought “within one year

after the discovery of the untrue statement or the omission, or

after such discovery should have been made by the exercise of

reasonable diligence . . . .” 15 U.S.C. § 77m. “A securities-

law violation is discovered when the plaintiff learns sufficient

information about the violation to plead it in a complaint with

enough detail and particularity to survive a Federal Rule of

Civil Procedure 12(b)(6) motion to dismiss” and a plaintiff is

“charged with knowledge of any fact that a reasonably diligent

plaintiff would have discovered.” Fed. Hous. Fin. Agency for

Fed. Nat’l Mortg. Ass’n v. Nomura Holding Am., Inc., 873 F.3d

85, 119 (2d Cir. 2017).

In this case, the plaintiffs allege that the statements

regarding Opera’s market share and number of MAUs were false or

misleading according to data from StatCounter. However, the

allegedly misleading statements specifically referred to

StatCounter. Based on the explicit reference to StatCounter, a

reasonably diligent plaintiff would have discovered the alleged

misstatement when it was made, or immediately thereafter. The

allegedly misleading statements with the reference to

StatCounter were made in July 2018. This case was not filed

until January 2020.

The allegedly misleading omissions regarding Opera’s entry

into the fintech market suffer the same defect. The plaintiffs

allege that at the time of the IPO, Opera had either already

entered the fintech market or had imminent plans to do so. The

support from the plaintiffs’ allegations comes from other

statements the defendants disclosed in June and July 2018 in

Opera’s Registration Statement and Prospectus, namely the

services agreement between Opera and Opay, the loan from Opera

to Opay, and that Opera owned a minority interest in Opay. To

the extent that it could be said that those statements omitted

material information, the plaintiffs filed this suit over a year

after discovery of the alleged omission should have been made.

Accordingly, the plaintiffs’ Section 11 claims are untimely

with respect to the statements made in the Offering Documents of

the IPO.

2. Standing

The defendants argue that plaintiff Lilian Lau lacks

standing to pursue her Section 11 claims. “To establish

standing under § 11 at the motion-to-dismiss stage, . . .

Plaintiffs need only assert that they purchased shares issued

pursuant to, or traceable to the public offerings.” City of

Omaha Police & Fire Ret. Sys. v. Evoqua Water Techs. Corp., 450

F. Supp. 3d 379, 403 (S.D.N.Y. 2020); see also DeMaria v.

Andersen, 318 F.3d 170, 176 (2d Cir. 2003) (holding that

“aftermarket purchasers” can have standing under Section 11 if

they can trace their shares to the allegedly defective

registration statement). Lau did not purchase any shares of

Opera until November 12, 2019, which was after the IPO in July

2018 and SPO in September 2019. Lau has failed to allege how

the stocks she purchased were traceable to the stocks issued in

the public offerings. Therefore, Lau lacks standing to bring

the Section 11 claims asserted in this case. There is no

dispute that plaintiff Leon Brown has standing. Accordingly,

plaintiff Lau has no standing to pursue her Section 11 claims.

This conclusion does not affect Leon Brown’s standing.

3. Negative Loss Causation

The defendants allege that the plaintiffs’ Section 11

claims fail because the alleged truth of the defendants’

statements was publicly available, and therefore any alleged

misrepresentations or omissions could not have caused the

plaintiffs’ loss. Courts have recognized that the negative loss

causation affirmative defense in the Section 11 context and the

loss causation element of Section 10(b) claims are “mirror

images.” In re Worldcom, Inc. Sec. Litig., No. 02-cv-3288, 2005

WL 375314, at *6 (S.D.N.Y. Feb. 17, 2005). As described above,

the plaintiffs have failed to allege adequately loss causation

in the Section 10(b) context. For the same reasons, the Section

11 claims should be dismissed. See, e.g., Amorosa v. AOL Time

Warner Inc., 409 F. App’x 412, 416–17 (2d Cir. 2011). Because

the allegedly corrective information was already publicly known

and referred to in the allegedly misleading statements, those

statements could not have caused the plaintiffs’ loss.

Accordingly, the plaintiffs’ Section 11 claims must be

dismissed.

D. Sections 15 and 20(a)

The plaintiffs cannot establish control person liability.

The plaintiffs’ claims under Section 15 of the Securities Act

and Section 20(a) of the Exchange Act fail because the

plaintiffs have failed to allege adequately a primary violation.

Section 15 of the Securities Act provides for liability for

individuals who “control[] any person liable under” provisions

including Section 11. 15 U.S.C. § 77o(a). Section 20(a) of the

Exchange Act provides for liability for anyone who “controls any

person liable under” provisions including Section 10(b). 15

U.S.C. § 78t.

“To establish a prima facie case of control person

liability, a plaintiff must show (1) a primary violation by the

controlled person, (2) control of the primary violator by the

defendant, and (3) that the defendant was, in some meaningful

sense, a culpable participant in the controlled person’s fraud.”

ATSI, 493 F.3d at 108; see also In re Lions Gate Entm’t Corp.

Sec. Litig., 165 F. Supp. 3d 1, 25 (S.D.N.Y. 2016). Because the

plaintiffs’ claims under Section 10(b) of the Exchange Act and

Section 11 of the Securities Act fail, the plaintiff cannot

establish control person liability under Section 15 of the

Securities Act or Section 20(a) of the Exchange Act.

Accordingly, the plaintiffs’ claims under Section 15 of the

Securities Act and Section 20(a) of the Exchange Act must be

dismissed.

CONCLUSION

The Court has considered all of the arguments of the

parties. To the extent not discussed above, the arguments are

either moot or without merit. For the foregoing reasons, the

defendant’s motion to dismiss is granted. The plaintiffs may

file a Second Amended Complaint by April 16, 2021. The Clerk is

directed to close Docket No. 56.

SO ORDERED.

Dated: New York, New York

March 13, 2021 ___/s/ John G. Koeltl__________

John G. Koeltl

United States District Judge