Castillo, IV v. 6D Global Technologies, Inc. et al

Filing 367

OPINION AND ORDER re: 363 MOTION for Reconsideration re; 357 Memorandum & Opinion,,, . filed by Benjamin Tianbing Wei. Wey's July 11, 2022 motion for reconsideration is denied. (Signed by Judge Denise L. Cote on 7/15/2022) (kv)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------- X
:
JOSEPH PUDDU, MARK GHITIS, VALERY
:
BURLAK, and ADAM BUTTER,
:
:
Plaintiffs,
:
:
-v:
:
NYGG (ASIA) LTD. and BENJAMIN TINBIANG :
WEI a/k/a/ BENJAMIN WEY,
:
:
Defendants.
:
:
-------------------------------------- X
APPEARANCES:
For plaintiffs:
Jonathan Richard Horne
Phillip C. Kim
Michael Alex Cohen
The Rosen Law Firm
275 Madison Avenue
34th Floor
New York, NY 10016
For defendants:
Warren Angelo Raiti
Warren Raiti
1345 Avenue of the Americas
Ste 33rd Floor
New York, NY 10105
Adam Brad Sherman
Tom M. Fini
Catafago Fini LLP
One Grand Central Place
Ste 47th Floor
New York, NY 10165

15cv8061 (DLC)
OPINION AND ORDER

DENISE COTE, District Judge:
Benjamin Wey has moved for reconsideration of the Opinion
of June 27, 2022 granting the plaintiffs’ motion for class
certification.

For the following reasons, Wey’s motion is

denied.
Background
This Court assumes familiarity with its June 27 Opinion and
summarizes only the facts necessary to decide this motion.

See

Puddu v. NYGG (Asia) Ltd., 15CV08061, 2022 WL 2304248 (S.D.N.Y.
June 27, 2022).

As described in the Second Amended Complaint

(“SAC”), Wey is an investor and stock promoter with a history of
stock manipulation.

Wey was a beneficial owner, through NYGG

(Asia) Ltd. (“NYGG (Asia)”), of a significant portion of the
shares of 6D Global Technologies, Inc. (“6D”).

Wey, however,

had not publicly disclosed his relationship to NYGG (Asia) or
6D.
The SAC explains that on September 10, 2015, the Department
of Justice and SEC announced an indictment and complaint against
Wey.

The announcement revealed Wey’s relationship with NYGG

(Asia).
day.

In response, the NASDAQ delisted 6D by the end of the

When the NASDAQ halted trading, 6D stock was priced at

$2.90 per share.
over the counter.

Several months later, 6D stock resumed trading
Within four days, its price had fallen to

$0.21 per share.
2

The plaintiffs filed this action on October 13, 2015,
bringing claims on behalf of themselves and a putative class of
6D shareholders.

On May 12, 2021, the Honorable Alison J.

Nathan approved a settlement between the plaintiffs and all
defendants except NYGG (Asia) and Wey.

Puddu v. 6D Global

Techs., Inc., No. 15CV08061, 2021 WL 1910656 (S.D.N.Y. May 12,
2021).

The case was reassigned to this Court on April 10, 2022.

On February 3, 2022, the plaintiffs moved to certify a
class and appoint class counsel.
27.

The motion was granted on June

Puddu, 2022 WL 2304248, at *5.

reconsideration on July 11.

Wey filed a motion for

That same day, Wey also filed a

petition before the Second Circuit to appeal the decision.
Discussion
The standard for granting a motion for reconsideration is
“strict.”

Cho v. Blackberry Ltd., 991 F.3d 155, 170 (2d Cir.

2021) (citation omitted).

A motion for reconsideration is “not

a vehicle for relitigating old issues, presenting the case under
new theories, securing a rehearing on the merits, or otherwise
taking a second bite at the apple.”

Analytical Surv., Inc. v.

Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (citation
omitted).

“A party may . . . obtain relief only when the party

identifies an intervening change of controlling law, the
availability of new evidence, or the need to correct a clear
error or prevent manifest injustice.”
3

Cho, 991 F.3d at 170.

The decision to grant or deny the motion for reconsideration
rests within “the sound discretion of the district court.”
Aczel v. Labonia, 584 F.3d 52, 61 (2d Cir. 2009) (citation
omitted).
The June 27 Opinion found that the plaintiffs had satisfied
the criteria for class certification under Fed. R. Civ. P. 23.
See Puddu, 2022 WL 2304248, at *2–5.

In particular, the

plaintiffs had shown that common questions of law and fact
regarding reliance predominated over individual ones.
*3–5.

Id. at

The plaintiffs made this showing by invoking a

presumption of reliance applicable in securities fraud cases
“involving primarily a failure to disclose.”

Affiliated Ute

Citizens of Utah v. United States, 406 U.S. 128, 143 (1972).

In

such cases, reliance may be presumed so long as the omissions
are material.

Id. at 153–54.

And, because materiality is a

question common to the entire class, the plaintiffs could rely
on the Affiliated Ute presumption to show that common questions
regarding reliance would predominate over individual ones.

See

Puddu, 2022 WL 2304248, at *4–5; Amgen Inc. v. Conn. Retirement
Plans & Tr. Funds, 568 U.S. 455, 470 (2013).
Wey argues that he should have been provided the
opportunity to rebut the Affiliated Ute presumption by showing
that the revelation of his beneficial ownership of 6D shares did
not impact the share price.

Wey points to the Supreme Court’s
4

decisions in Halliburton Co. v. Erica P. John Fund, Inc., 573
U.S. 258 (2014) (“Halliburton II”) and Goldman Sachs Group, Inc.
v. Arkansas Teacher Retirement System, 141 S. Ct. 1951 (2012),
which hold that a defendant may rebut a presumption of reliance
in cases involving affirmative misrepresentations by showing
that those misrepresentations did not impact the share price.
Wey also submitted an expert report finding that 6D’s share
price was unaffected in the day of trading that occurred after
the SEC and Department of Justice announcements.
Wey already raised this argument in opposition to the
plaintiff’s motion for class certification.
need not be reconsidered here.
F.3d at 52.

Accordingly, it

See Analtyical Surv., Inc., 684

As explained in the June 27 Opinion, the Affiliated

Ute presumption may not generally be rebutted by evidence
regarding price impact, because Affiliated Ute does not infer
reliance from a change in the share’s market price.
WL 2304248, at *4.

Affiliated Ute instead focuses on the

materiality of the omission.
54.

Puddu, 2022

Affiliated Ute, 406 U.S. at 153–

The Opinion therefore found, in line with other decisions

in this District, that evidence of price impact alone does not
rebut the Affiliated Ute presumption.
at *4–5.

Puddu, 2022 WL 2304248,

See also Gruber v. Gilbertson, 16CV09727, 2019 WL

4439415, at *8 (S.D.N.Y. Sept. 17, 2019); City of Livonia

5

Employee’s Ret. Sys. v. Wyeth, 284 F.R.D. 173, 184 (S.D.N.Y.
2012).
Wey nevertheless insists that the logic of Halliburton II
and Goldman Sachs requires that he have an opportunity to rebut
the Affiliated Ute presumption with evidence that his omissions
had no price impact.

Neither Halliburton II nor Goldman Sachs

involved the Affiliated Ute presumption.

Instead, in both

cases, the plaintiffs attempted to invoke the presumption of
reliance articulated in Basic Inc. v. Levinson, 485 U.S. 224
(1988).

See Halliburton II, 573 U.S. at 263; Goldman Sachs, 141

S. Ct. at 1957.

The Basic presumption allows a plaintiff to

demonstrate reliance by “invoking a presumption that the price
of stock traded in an efficient market reflects all public,
material information -- including material misstatements.”
Halliburton II, 573 U.S. at 263 (citing Basic, 485 U.S. at 108).
In Halliburton II, the Supreme Court held that defendants can
rebut the Basic presumption at the class certification stage by
showing that the misstatement did not affect the company’s share
price.

Id. at 279.

And in Goldman Sachs, the Supreme Court

held that evidence regarding a corrective disclosure’s price
impact is relevant even when the original misstatement was
“generic,” and therefore would not have significantly moved the
share price at the time it was made.
1951, 1960–61.
6

Goldman Sachs, 141 S. Ct.

Wey notes that, just as share price in an efficient market
incorporates the effects of a misrepresentation, so too does it
incorporate the effects of an omission.

Wey also emphasizes

that the allegations in the SAC do not involve “face-to-face
transactions,” but instead involve stock traded on a public
exchange.

Accordingly, Wey argues that the absence of price

impact shows that his alleged omissions did not matter to
investors, and that investors therefore did not rely on the
omissions when purchasing 6D shares.
As explained in the June 27 Opinion, however, the
Affiliated Ute presumption does not assume an efficient market.
See Puddu, 2022 WL 2304248, at *4.

Accordingly, an investor may

still rely on a material omission even if a corrective
disclosure does not quickly update the share price.

Nor do the

plaintiffs’ arguments for class certification depend upon an
efficient market.

Indeed, the plaintiffs strongly contested

Wey’s suggestion that the market for 6D shares was efficient.
Finally, the fact that 6D shares were traded on a national
exchange rather than face-to-face does not mean that the
presumption of reliance is rebutted by evidence that corrective
disclosures resulted in no price impact during a single day of
trading.
strawman.

Ultimately, Wey’s arguments are targeted at a
The plaintiffs did not attempt to demonstrate

reliance through a price-maintenance theory dependent on an
7