Request to be lead counsel in SEPTA vs. Orrstown Bank

7/29/2019 Request to be lead counsel in SEPTA vs. Orrstown Bank

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CHIMICLES & TIKELL IS LLPNicholas E. Chimicles, Pa. Id. No. 17928Kimberly Donaldson Smith, Pa. Id. No. 84116Christina Donato Saler, Pa. Id. No. 92017Benjamin F. Johns, Pa. Id. No. 201373One Haverford Centre361 West Lancaster AvenueHaverford, PA 19041Phone (610) 642-8500Fax (610) 649-3633

UNITED STATES DISTRICT COURTMIDDLE DISTRICT OF PENNSYLVANIA

SOUTHEASTERN PENNSYLVANIATRANSPORTATION AUTHORITY,on behalf of itself and all otherssimilarly situated,

Plaintiff,

v.

ORRSTOWN FINANCIALSERVICES, INC., ORRSTOWNBANK, ANTHONY F. CEDDIA,

JEFFREY W. COY, MARK K.KELLER, ANDREA PUGH, THOMASR. QUINN, JR., GREGORY A.ROSENBERRY, KENNETH R.SHOEMAKER, GLENN W. SNOKE,

JOHN S. WARD, JOEL R.

ZULLINGER, and BRADLEY S.EVERLY,

Defendants.

Civil Action No. 1:12-cv-00993-YK

ECF

MEMORANDUM IN SUPPORT OFSOUTHEASTERNPENNSYLVANIA

TRANSPORTATIONAUTHORITYS MOTION TO BEAPPOINTED LEAD PLAINTIFFAND FOR APPROVAL OF ITSSELECTION OF L EAD COUNSEL

_________________________________

Case 1:12-cv-00993-YK Document 28-2 Filed 07/24/12 Page 1 of 26


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TABLE OF CONTENTS

I. INTRODUCTION ........................................................................................... 1

II. PROCEDURAL HISTORY ............................................................................ 4

III. SUMMARY OF THE FACTS ........................................................................ 6

IV. ARGUMENT ................................................................................................... 9

A. SEPTA Should Be Appointed Lead Plaintiff ........................................ 9

1. The Procedures Required By The PSLRA ..................................... 9

(a) SEPTA Has Complied With The PSLRA ........................... 11

(b) SEPTA Has the Largest Financial Interest In the Action .... 13

(c) SEPTA Otherwise Satisfies Rule 23.................................... 14

(i) SEPTAs Claims Are Typical of the Claims of theClass ............................................................................. 15

(ii) SEPTA Will Adequately Represent the Class .............. 16

2. Presumption Not Rebutted ........................................................ 18

B. The Court Should Approve SEPTAs Selection of Lead Counsel ..... 18

V. CONCLUSION .............................................................................................. 20



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TABLE OF AUTHORITIES

CASES

In re American Bus. Finance Services, Noteholders Litg.,2005 U.S. Dist. LEXIS 5074 (E.D. Pa. Mar. 29, 2005) ................................ 15

In re Cendant Corp. Litigation,264 F.3d 201 (3d Cir. 2001) .............................................................. 11, 13, 15

In re Herley Industries Inc.,2010 U.S. Dist. LEXIS 3463 (E.D. Pa. Jan. 15, 2010) ................................ 4, 6

J anovici v. DVI, Inc.,2003 U.S. Dist. LEXIS 22315 (E.D. Pa. Nov. 25, 2003) .................. 11, 15, 17

Lowrey v. Toll Brothers, Inc.,2007 U.S. Dist. LEXIS 99501 (E.D. Pa. Jun. 29, 2007) ............................... 15

In re Sterling Financial Corp. Securities Class Action,MDL No. 07-1879, 2007 U.S. Dist. LEXIS 93708 (E.D. Pa. Dec. 21,2007) .............................................................................................................. 14

In re Vicuron Pharms., Inc. Sec. Litigation,225 F.R.D. 508 (E.D. Pa. 2004) .............................................................. 13, 15

STATUTES

15 U.S.C. 77z-1(a), et seq ..............................................................................passim

15 U.S.C. 78u-4(a), et seq ..............................................................................passim



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I . INTRODUCTION

Southeastern Pennsylvania Transportation Authority (SEPTA or

Movant) respectfully submits this memorandum in support of its motion for

entry of an order appointing it as the Lead Plaintiff in this securities class action

and approving its choice of counsel as Lead Counsel pursuant to the mandates of

the Private Securities Litigation Reform Act of 1995 (PSLRA). This case is a

securities class action asserting claims under Sections 11, 12(a) and 15 of the

Securities Act of 1933 (the Securities Act) and under Sections 10(b) and 20(a) of

the Securities Exchange Act of 1934 (the Exchange Act), and Securities and

Exchange Commission (SEC) Rule 10b-5 promulgated thereunder. Therefore,

this Action is governed by the PSLRA, which sets forth specific procedures

governing the management of federal securities class actions.

At the outset of a securities class action, the PSLRA requires the

appointment of a plaintiff to lead the litigation (the Lead Plaintiff). 15 U.S.C.

77z-1(a)(3)(B); 15 U.S.C. 78u-4(a)(3)(B). The PSLRA dictates that the Court

select the most adequate plaintiff as the Lead Plaintiff, and, in doing so, that the

Court adopt a presumption that the most adequate plaintiff is the person or entity

who: (i) filed the complaint or moved for lead plaintiff appointment; (ii) has the

largest financial interest in the relief sought by the Class of all movants; and (iii)



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otherwise preliminarily satisfies the requirements of Rule 23 of the Federal Rules

of Civil Procedure (Rule 23). The PSLRA also provides that the Lead Plaintiff

selects lead counsel for the putative class, subject to Court approval. 15 U.S.C.

77z-1(a)(3)(B)(v); 15 U.S.C. 78u-a(a)(3)(B)(v).

SEPTA is the most adequate plaintiff under the PSLRA to serve as Lead

Plaintiff on behalf of the Class in this Action.1 As of the time of this filing,

SEPTA is the only plaintiff to have filed a complaint against Defendants for

alleged violations of federal securities laws on behalf of acquirors of Orrstown

Financial Services Inc. (Orrstown) common stock during the period of March 24,

2010 through October 27, 2011, inclusive (Class Period).2 Further, as set forth

in detail below, SEPTA purchased 14,574 shares of Orrstown common stock and

suffered losses of approximately $250,000 from its purchase and/or acquisition of

Orrstown common stock during the Class Period. As of the time of this filing,

1 In its complaint, SEPTA defines two classes: the Securities Act Class whichconsists of those persons and/or entities who purchased Orrstown common stock inconnection with, or traceable to, Orrstowns February 23, 2010 RegistrationStatement and the March 24, 2010 Prospectus Supplement; and the Exchange ActClass which consists of those persons and/or entities who purchased Orrstowncommon stock on the open market between March 24, 2010 and October 27, 2011.

By definition, SEPTA is a member of each of these purported classes. For ease ofreference herein, the classes will be referred to as the Class.

2 The relevant federal securities laws specifically authorize that any Class Membermay seek to be appointed lead plaintiff by either filing a complaint or moving forappointment as lead plaintiff. See 15 U.S.C. 77z-1(a)(2)-(3); 15 U.S.C. 78u-4(a)(2)-(3). SEPTA has done both.



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SEPTA knows of no other movant who has sought to be appointed Lead Plaintiff

or who has a greater financial interest; therefore, SEPTA believes that it has the

largest financial interest in the relief sought by the Class of any Lead Plaintiff

movant.

Moreover, SEPTA satisfies the adequacy and typicality requirements of

Rule 23 because it is typical of the Orrstown investors who were also harmed by

Defendants uniform misconduct as alleged in the complaint. A copy of the

PSLRA-required Certification that SEPTA filed as part of its complaint is attached

as Exhibit A to the Declaration of Christina Donato Saler in Support of SEPTAs

Motion to Be Appointed Lead Plaintiff and for Approval of Lead Plaintiffs Section

of Lead Counsel (Saler Decl.) filed herewith. This Certification sets forth

SEPTAs transactions in Orrstown securities during the Class Period. Importantly,

this Certification evidences that SEPTA understands its duties and responsibilities

to the Class, and that it is willing and able to oversee the vigorous prosecution of

this action as the Lead Plaintiff. SEPTA will ensure that the litigation is conducted

in the best interests of the members of the Class. Moreover, SEPTA is not subject

to any unique defenses that would render it incapable of adequately representing

the Class. Indeed, the PSLRAs legislative history shows that SEPTA is precisely

the type of investor a public institution whose participation in securities class

actions the PLSRA seeks to encourage. See Rep. No. 104-98, at 11 (1995),



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eprinted in 1995 U.S.C.C.A.N. 679, 690 (Senate Report on the PSLRA); accord In

re Herley Industries Inc., Civil Action No. 06-2596, 2010 U.S. Dist. LEXIS 3463,

*9 (E.D. Pa. Jan. 15, 2010) (In drafting the PSLRA, Congress sought to

encourage greater involvement of institutional investors in securities class

actions.). Finally, SEPTA has selected to serve as Lead Counsel the law firm of

Chimicles & Tikellis LLP, a nationally recognized law firm in the area of

securities litigation that has successfully litigated numerous federal securities

actions with exceptional results for the investors it has represented. See 6 of

Saler Decl. and Exhibit C thereto.

SEPTA, therefore, respectfully requests that the Court grant its motion to be

appointed Lead Plaintiff and approve its selection of Chimicles & Tikellis LLP to

serve as Lead Counsel.

I I .PROCEDURAL HISTORYAfter extensive investigation and review of Orrstowns SEC filings and a

substantial amount of publicly available information including news stories, press

releases and analyst reports, SEPTA filed the complaint in this action on May 25,

2012, Dkt. #1 (Complaint). The Complaint names as Defendants: Orrstown, its

wholly owned subsidiary Orrstown Bank, former officer Bradley S. Everly, officer

and director Thomas R. Quinn, Jr., and remaining directors Anthony F. Ceddia,

Jeffrey W. Coy, Mark K. Keller, Andrea Pugh, Gregory A. Rosenberry, Kenneth



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R. Shoemaker, Glenn W. Snoke, John S. Ward, and Joel R. Zullinger. Each of the

individual defendants served in either their capacity as officer and/or director

during all times relevant to the allegations in SEPTAs Complaint. On the same

day that SEPTA filed the Complaint, it also published notice of this lawsuit on the

PRNewswire (PSLRA Notice), in accordance with Sections 77z-1(a)(3)(A) and

78u-4(a)(3)(A). SeeSaler Decl., Exh. B.

Within one week of its filing, SEPTA served each of the defendants with the

Complaint, and defendants counsel entered their appearance in the Action. Given

that SEPTA has brought this case as a class action and Local Rule 23.3s

requirement that a motion for class certification be brought within 90 days of the

filing of the complaint, the parties jointly filed a Stipulation and Proposed Order to

extend class certification and other filing deadlines until after the Court had

appointed a Lead Plaintiff and Lead Counsel. See Stipulation and Order (Dkt. #

26). Specifically, the proposed order provides that after the appointment of Lead

Plaintiff, the Court will set a Scheduling Conference to address, inter alia, the

timing for the filing of a consolidated and/or amended complaint,3 the filing and

3 If SEPTA is appointed Lead Plaintiff, it is expected that an amended complaintwill be filed. Several critical and relevant events have taken place at Orrsotwnsince the May 25th filing of the initial Complaint that will impact and expand theallegations, including the departure of several executives and officers of the Bankand the sale of 65 distressed commercial loans with a carrying loan balance of$28.6 million to a group of independent investors. In addition, SEPTAs counselhas conducted an additional investigation relating to the matters raised in the



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briefing of Defendants responsive pleading, and the filing and briefing of Lead

Plaintiffs class certification motion. The Court entered the proposed order in its

entirety on June 28, 2012. See id.

To date, no other lawsuits have been filed against Defendants that allege

substantially similar claims as those asserted in this action commenced by SEPTA.

SEPTA now timely files its Motion for Appointment of Lead Plaintiff within the

60-day period triggered by its PSLRA Notice published on May 25, 2012.

I I I . SUMMARY OF THE FACTSThe Complaint alleges claims for violations of Sections 11, 12(a) and 15 of

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

during the Class Period.

Orrstown is the holding company for its wholly owned subsidiary Orrstown

Bank, a state-charted Pennsylvania bank with twenty-one branches concentrated in

South Central Pennsylvania and one branch in Hagerstown, Maryland. The Bank

provides community banking services and grants commercial, residential,

consumer and agribusiness loans within its geographic market. Approximately

74% of the Banks loan portfolio is comprised of commercial loans. At all relevant

times in the Class Period, the individual officer and/or director defendants were

Complaint, and that investigation is ongoing, yielding numerous new facts that arealso pertinent to the claims set forth in the Complaint.



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responsible for management of Orrstown and the Bank. Throughout the Class

Period, Orrstown common stock traded on the NASDAQ.

SEPTAs claims stem from Orrstowns common stock offering (Offering)

of 1,481,481 million shares in March 2010. The Registration Statement for the

offering was filed on February 23, 2010, and the Prospectus was filed on March

23, 2010 (collectively Offering Documents). For purposes of the offering,

Orrstowns shares were priced at $27. The Offering commenced on March 24,

2010, closed five days later, and raised $37.5 million.

In the Offering Documents and during the Class Period, SEPTA alleges that

Defendants issued materially false and misleading statements regarding the Banks

lending practices and financial results. Specifically, SEPTA alleges that

Defendants failed to disclose to investors that the Banks loan portfolio consisted

primarily of risky, impaired loans; the Banks underwriting and credit

administration policies, procedures and controls were not stringent or conservative,

and were wholly inadequate; the Banks credit risk management practices were

inadequate; the Bank failed to maintain internal controls and programs that would

identify adequate allowances for loan and lease losses; and the Banks

management (its level of experience and oversight) was insufficient. See

Complaint (Dkt. #1) at 6-8. After the offering closed, SEPTA alleges that

Orrstown purposefully misled the Class about these same matters, and these false



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statements caused Orrstowns stock to trade at artificially inflated prices during the

Class Period, reaching a closing price high of $28.64 per share on April 6, 2011.

SEPTA alleges that it was not until the Company released financial

quarterly results and a letter to investors on October 27, 2011, that the full truth

about Orrstowns financial condition was revealed. Orrstown announced that

because of its tremendous losses, it was suspending its dividend indefinitely at the

direction of the federal banking regulator. In reaction to this news, on October 27,

2011, Orrstowns share price fell by $3.91 per share, or 29.6 %, to close at $9.29

per share on extraordinarily heavy trading volume. Prior to this time, the Banks

stock had only experienced a similar drop in July 2011 after news of a second

quarter loss and the Companys outsourcing of the credit review process to an

independent party was reported. Thus, on October 27, 2011, it was the news of

regulator involvement coupled with poor financial results that devastated the stock

price.

In Orrstowns Offering, SEPTA purchased 4,517 shares of Orrstown

common stock and then purchased an additional 10,057 shares in various trades

throughout the Class Period. SEPTA alleges that Defendants violated the

securities laws because they made materially untrue and misleading statements

and/or omitted material information from Offering Documents and throughout the

Class Period concerning (a) the quality of management and its oversight; (b) the



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quality of the Banks underwriting standards and loan review process; and (c) the

quality of the Banks loan portfolio including the percentage of non-performing

loans and required levels of loan reserves. As a result of these violations, Movant

and the members of the Class have incurred substantial damages.

IV. ARGUMENTA.SEPTA Should Be Appointed Lead Plaintiff

1.The Procedures Required By The PSLRAThe procedure for the selection of Lead Plaintiff to oversee class actions

brought under the federal securities laws is defined by Section 27 of the Securities

Act and Section 21D of the Exchange Act, as amended by the PSLRA.

Specifically, 27(a)(3)(A)(i) and 21D(a)(3)(A)(i) provide that within 20 days

after the date on which the first class action is filed under the PSLRA, the plaintiff

shall cause to be published, in a widely circulated national business-oriented

publication or wire service, a notice informing putative class members of the

Action and their right to file a motion for the appointment of lead plaintiff.

The PSLRA further provides that within 60 days after the publication of the

notice, any person or group of persons who are members of the proposed class may

apply to the court to be appointed Lead Plaintiff. 15 U.S.C. 77z-1(a)(3)(A)(i)(II);

15 U.S.C. 78u-4(a)(3)(A)(i)(II). Section 27(a)(3)(B) of the Securities Act and

Section 21D(a)(3)(B) of the Exchange Act direct the court to consider any motions



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by a plaintiff or purported class members to serve as lead plaintiff in response to

any such notice by not later than 90 days after the date of publication pursuant to

these sections, or as soon as practicable after the court decides any pending motion

to consolidate any actions asserting substantially the same claim or claims. Under

these PSLRA sections of the Securities Act and Exchange Act, the court shall

consider any motion made by a class member and shall appoint as lead plaintiff the

member or members that the court determines to be most capable of adequately

representing the interests of class members.

The PSLRA provides the court with criteria to use in determining the most

adequate plaintiff:

[T]he court shall adopt a presumption that the mostadequate plaintiff in any private action arising under thistitle is the person or group of persons that

(aa) has either filed the complaint or made a motion inresponse to a notice. . . .;

(bb) in the determination of the court, has the largestfinancial interest in the relief sought by the class; and

(cc) otherwise satisfies the requirements of Rule 23 of theFederal Rules of Civil Procedure.

21D(a)(3)(B)(iii)(I); 15 U.S.C. 78u-4(a)(3)(B)(iii)(I). The Third Circuit has

summarized the process of identifying the most adequate plaintiff as a two-step

process:



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first the court identifies the presumptive lead plaintiff,and then determines whether any member of the putativeclass had rebutted the presumption.

In re Cendant Corp. Litig., 264 F.3d 201, 262 (3d Cir. 2001) (Cendant II). In

applying the PSLRAs criteria, SEPTA has demonstrated itself to be the most

adequate plaintiff to represent the proposed Class.

(a)SEPTA Has Complied With The PSLRASEPTA is the first and only plaintiff to file a securities class action against

Defendants arising out of the matters alleged in SEPTAs Complaint. The

Complaints allegations are premised upon extensive legal research, financial

analysis of Orrstowns reporting with the SEC, and factual investigation into

Orrstowns commercial lending practices. Just hours after SEPTA filed the

Complaint on May 25, 2012, it published the PSLRA Notice over the

PRNewswire, which informed potential class members of the pendency of the

Action and their right to move to be appointed lead plaintiff and designate their

choice of lead counsel within 60 days. See Saler Decl. at Exh. B. SEPTAs

PSLRA Notice provides accurate and complete information about the Action and

the claims asserted in the Complaint, and satisfies the objectives of the PSLRA to

encourage interested class members to come forward. See, e.g., J anovici v. DVI,

Inc., 2003 U.S. Dist. LEXIS 22315, 16-19 (E.D. Pa. Nov. 25, 2003).



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The time period in which class members may move to be appointed lead

plaintiff, pursuant to 15 U.S.C. 77z-1(a)(3)(A)-(B) and 15 U.S.C. 78u-

4(a)(3)(A)-(B), expires on July 24, 2012. In accordance with this statutory

provision of the PSLRA, SEPTA timely moves this Court to be appointed Lead

Plaintiff in this Action.

Upon filing the Complaint in this Action, SEPTA submitted a signed

certification stating that it had reviewed the Complaint and is willing to serve as a

representative plaintiff on behalf of the Class. See Saler Decl., Exh. A. The

certificate confirms that SEPTA purchased a substantial number of shares of

Orrstown common stock in the Offering and during the Class Period, and has

suffered significant losses in connection with its Orrstown investment as a result of

Defendants alleged wrongdoing. See id. SEPTA is a public transportation

authority that is well-qualified to prosecute this Action effectively and efficiently

and to monitor its counsel as a fiduciary to the Class. To represent the Class,

SEPTA has also selected and retained highly competent counsel with significant

experiences and success in securities class action litigation and other complex

litigation. The resume of proposed Lead Counsel Chimicles & Tikellis LLP is

filed herewith at Saler Decl., Exh. C.



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(b)SEPTA Has the Largest Financial Interest In the ActionThe PSLRA requires that a court adopt a rebuttable presumption that the

most adequate plaintiff . . . is the person or group of persons that . . . has the largest

financial interest in the relief sought by the class. 15 U.S.C. 77z-1(a)(3)(B)(iii);

15 U.S.C. 78u4(a)(3)(B)(iii). The Third Circuit has held that for this analysis,

courts should consider, among other things: (1) the number of shares that the

movant purchased during the putative class period; (2) the total net funds expended

by the plaintiffs during the class period; and (3) the approximate losses suffered by

the plaintiffs." Cendant II, supra, 264 F.3d at 262. A fourth factor for

consideration, although not enumerated by Cendant II, is that institutional

investors are considered preferred lead plaintiffs. In re Vicuron Pharms., Inc. Sec.

Litig., 225 F.R.D. 508, 511 (E.D. Pa. 2004). In applying these factors, there is no

explicit guidance on the question of relative weight accorded to each of the three

factors articulated in Cendant II, 264 F.3d at 262, but a survey of decisions

indicates that courts focus on the amount of financial loss. Id.

During the Class Period, SEPTA purchased 14,574 shares of Orrstown

common stock. As illustrated by its certification, SEPTA expended total net funds

of $369,053.37 on Orrstown common stock during the Class Period. See Saler

Decl., Exh. A. SEPTA asserts that it purchased Orrstown stock at prices

artificially inflated by Defendants false and misleading statements and suffered



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losses of approximately $250,404. As to the final factor for consideration, SEPTA

is an institutional investor and purchased Orrstown stock for its employee pension

plan.

No other investor, much less one with greater losses, has filed a complaint

alleging substantially the same securities claims against Defendants, nor has any

other investor informed SEPTA or its counsel that it intends to file a competing

lead plaintiff motion. Therefore, as of the time of this filing, SEPTA believes that

it has satisfiedeach of theCendant II elements because it has: the greatest number

of Orrstown shares purchased during the Class Period; the greatest total net funds

expended on Orrstown shares during the Class Period; and suffered the largest

losses. The gravamen of the PSLRA is the prevention of frivolous securities class

actions, brought . . . [by] those without a genuine interesting the securities at

issue. In re Sterling Financial Corp. Securities Class Action, MDL No. 07-1879,

2007 U.S. Dist. LEXIS 93708, *8 (E.D. Pa. Dec. 21, 2007) (citing Manual for

Complex Litigation, Fourth 531 (2004)). By all accounts, SEPTA has a genuine

and sincere interest in prosecuting this Action, is the most adequate plaintiff and

should, therefore, be appointed to serve as Lead Plaintiff.

(c)SEPTA Otherwise Satisfies Rule 23The PSLRA provides that the Lead Plaintiff must also otherwise satisfy the

requirements of Rule 23 of the Federal Rules of Civil Procedure. 15 U.S.C.



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77z-1(a)(3)(B)(iii)(I)(cc); 15 U.S.C. 78u-4(a)(3)(B)(iii)(I)(cc). For purpose of

lead plaintiff appointment, the Court must evaluate whether the [Movant] has

made a prima facie showing of the typicality and adequacy requirements of that

rule. In re Vicuron Pharms., Inc. Sec. Litig., 225 F.R.D. at *9-10;J anovici, 2003

U.S. Dist. LEXIS 22315 at *38 (same). Thus, the inquiry is limited so as to defer a

full examination of the remaining requirements of Rule 23 until the Lead Plaintiff

moves for class certification. See id.; see also Cendant II, supra, at 263. As

demonstrated below, SEPTA satisfies the typicality and adequacy requirements of

Rule 23(a), thereby demonstrating that it is an appropriately appointed Lead

Plaintiff. SEPTA has claims that are typical of those of other Class Members and

can adequately serve as Lead Plaintiff.

(i)SEPTAs Claims Are Typical of the Claims of the ClassThe Rule 23 typicality requirement requires that the injuries of the [lead

plaintiff] movant with the largest financial losses should not be markedly different

from those of the other moving parties and that the movant's claims be based on the

same legal issues as the claims of other class members. In re Am. Bus. Fin.

Servs., Noteholders Litg., 2005 U.S. Dist. LEXIS 5074 at *4 (citing Cendant II,

supra, at 265). Factual differences will not render a claim atypical if the claim

arises from the same event or practice or course of conduct that gives rise to the



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claims of the class members, and if it is based on the same legal theory. Lowrey

v. Toll Brothers, Inc., 2007 U.S. Dist. LEXIS 99501, *8-9 (E.D. Pa. Jun. 29, 2007).

Here, the questions of law and fact common to the members of the Class and

SEPTA, which predominate over questions that may affect individual claims,

include: (a) whether the federal securities laws were violated by Defendants acts;

(b) whether Defendants statements during the Class Period misrepresented and/or

omitted material facts; (c) whether Defendants acted intentionally or recklessly; (d)

whether the market price of Orrstown common stock was artificially inflated due

to the activities complained of; and (e) the extent of damages members of the Class

sustained and the appropriate measure of those damages. SEPTA meets the

typicality requirement since, like other purported class members, SEPTA

purchased Orrstown common stock during the Class Period and suffered damages

as a result of the artificial inflation of stock prices. SEPTAs claims, like the

claims of each member of the Class, arise from Defendants alleged false and

misleading statements made in the Offering Documents and throughout the Class

Period.

(ii)SEPTA Will Adequately Represent the Class

The adequacy of representation requirement of Rule 23 is satisfied where it

is established that a representative party will fairly and adequately protect the

interests in the class. The PSLRA directs the court to limit its inquiry regarding



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the adequacy of the movant to whether the interest of the movant are clearly

aligned with the members of the purported Class and whether there is evidence of

any antagonism between the interests of the movant and the other members of the

Class. 15 U.S.C. 77z-1(a)(3)(B); 15 U.S.C. 78u-4(a)(3)(B). As articulated in

this circuit, the adequacy requirement is satisfied when both the class

representative and its attorneys are capable of satisfying their obligations, and

neither has interests conflicting with those of other class members. J anovici,

2003 U.S. Dist. LEXIS 22315 at *38 (relying uponCendant II, supra, at 265).

The interests of SEPTA are aligned with the members of the proposed Class.

There is no antagonism between SEPTA and the proposed members of the Class.

SEPTAs interest is to seek to remedy the substantially similar harm inflicted on

the members of the Class through the enforcement of their legal rights under the

federal securities laws. SEPTAs legal claims and the harm it suffered, inter alia

the purchase of Orrstown stock at an inflated price due to Defendants omissions

from and alleged false and misleading statements in Orrstowns SEC filings, are

typical of the members of the Class. And, as of the time of this filing, SEPTA is

the only investor to take the necessary steps to prosecute a securities action against

Orrstown. In addition, SEPTA has followed the PSLRA mandates, extensively

researched and filed the Complaint and has certified, in its PSLRA Certification,

that it is willing to serve as, and assume the responsibilities of Lead Plaintiff,



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thereby amply demonstrating its adequacy as a Lead Plaintiff. Finally, in seeking

legal representation, SEPTA has selected and retained counsel highly experienced

in prosecuting securities class actions. For these reasons, SEPTA should be

appointed Lead Plaintiff in this Action.

2. Presumption Not RebuttedThe presumption of the "most adequate" plaintiff "may be rebutted only

upon proof by a member of the purported plaintiff class that the presumptive most

adequate plaintiff - (aa) will not fairly and adequately protect the interests of the

class; or (bb) is subject to unique defenses that render such plaintiff incapable of

adequately representing the class." 15 U.S.C. 78u-4(a)(3)(B)(iii)(II). No member

of the purported Class has claimed or submitted proof or demonstrated a

reasonable basis for rebutting the presumption that SEPTA is the presumptive

most adequate plaintiff.

B.The Court Should Approve SEPTAs Selection of Lead CounselThe PSLRA vests authority in the Lead Plaintiff to select and retain Lead

Counsel, subject to court approval. 15 U.S.C. 27(a)(3)(B)(v); 15 U.S.C.

21D(a)(3)(B)(v). SEPTA has selected the law firm of Chimicles & Tikellis LP

(C&T or Firm) to serve as Lead Counsel. C&T has extensive experience in

the area of securities litigation and representing investors in pursuing claims for



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violations of the Securities Act and Exchange Act. SeeSaler Decl., Exh. C (firm

biography).

C&T is a leading class action law firm, with a national practice, that

specializes in complex litigation with an emphasis on securities, antitrust and

consumer cases. The Firm has successfully litigated both class actions and

derivative shareholder suits in federal and state courts throughout the country.

C&T has placed special emphasis on the successful representation of public and

private institutional investors as "Lead Plaintiffs" and has been appointed as lead

counsel in numerous cases brought after the enactment of the PSLRA. See id.

C&T holds the distinction of securing a $185 million jury verdict for investors

after a six-week trial in which Mr. Chimicles was lead trial counsel; the verdict

was the first and largest jury verdict in a federal securities class action under the

PSLRA. Following the jury trial and the upholding of the jury verdict on liability

in the face of post-trial motions, the Honorable Dean D. Pregerson of the United

States District Court for the Central District of California said: I think when you

go through the factors, the exceptional result achieved for the class, I would agree

that verdict and the settlement certainly qualify as an exceptional result. . .

Certainly, I would regard it as a difficult case. On a scale of 1 to 10, it would be a

9 or 10, in that range. To date, fewer than a half dozen securities class actions



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have gone to trial and resulted in a plaintiffs verdict in the nearly 18 years since

the PSLRA was enacted, putting C&T in rare company.

In the area of securities litigation involving banking institutions, firms

headed by Mr. Chimicles have represented investors in numerous and successful

class actions over the last 30 years. Mr. Chimicles, as lead trial counsel, conducted

a 20 week jury trial in 1987 in the landmark In re Continental Illinois Corporation

Securities Litigation, Civil Action 82 C4712 (N.D. Ill.), a case in which the

investors ultimately recovered $40 million. Mr. Chimicles was also co-lead

counsel for the investors in Sunrise Savings & Loan Assn Securities Litigation,

MDL No. 655 (E.D. Pa.), in which the investor class recovered $15 million. Under

any measure, C&T is highly qualified to represent the Orrstown investors in this

litigation.

SEPTAs selection of C&T to serve as Lead Counsel should be approved.

V.CONCLUSIONFor the foregoing reasons, SEPTA respectfully requests that the Court: (i)

appoint SEPTA as Lead Plaintiff in this Action and any subsequently filed related

class actions; and (ii) approve SEPTAs selection of Chimicles & Tikellis LLP to

serve as Lead Counsel to the Class.



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Dated: July 24, 2012 Respectfully submitted,

CHIMICLES & TIKELL IS LL P

/s/ Benjamin F. J ohnsNicholas E. ChimiclesKimberly Donaldson SmithChristina Donato SalerBenjamin F. JohnsOne Haverford Centre361 West Lancaster AvenueHaverford, PA 19041

Telephone: (610) 642-8500

Fax: (610) [email protected]@[email protected]@chimicles.com

Counsel for Proposed Lead Plaintiff SEPTA



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LOCAL RULE 7.8 CERTIFICATE

I, Benjamin F. Johns, hereby certify pursuant to LR 7.8(b)(2) that SEPTAs

Memorandum in Support of Its Motion for Lead Plaintiff is 21 pages long with

4,875 words, and therefore, the memorandum complies with this local rules word-

count limit.

Date: June 24, 2012 /s/ Benjamin F. J ohnsBenjamin F. Johns



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CERTIFICATE OF SERVCIE

I, Benjamin F. Johns, a member of the bar of this Court, hereby certify that

true and correct copies of Plaintiffs Motionfor Appointment as Lead Plaintiff and

Approval of Its Selection of Lead Counsel, supporting memorandum, proposed

order and the Declaration of Christina Donato Saler in support thereof, have been

electronically filed and served on all Defendants counsel, via the Courts ECF

system, this 24

th

day of July, 2012, as follows:

David J . CreaganDavid E. EdwardsWhite and Williams, LLP1650 Market StreetOne Liberty Place, Suite 1800Philadelphia, PA 19103215-864-7032

Email: [email protected]: [email protected]

By: /s/ Benjamin F. J ohnsBenjamin F. Johns(PA 201373)[email protected] & Tikellis LLP

One Haverford Centre361 West Lancaster AvenueHaverford, PA 19041Phone: (610) 642-8500Fax: (610) 649-3633


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