DECISION & ORDER ON MOTION The Court held extensive oral argument on February 3, 2021 on the pre-answer motion by certain defendants, pursuant to CPLR 3211(a)(1) and (7), to dismiss the Amended Complaint in this action alleging breaches of §§11 and 15 of the Securities Act of 1933 purportedly arising out of the December 2019 initial public offering of XP Inc. shares (NYSCEF Doc. No. 22). The Court complimented counsel for the parties on their excellent briefing and superb oral advocacy during the approximately 90-minute oral argument. Passing the issue of whether defendants’ registration statement and prospectus are actionable — which the Court is expressly not deciding although the Court could conclude that the alleged omissions in the offering documents did not significantly alter the total mix of information available to a reasonable investor [see Jianming Lyu v. Ruhnn Holdings Ltd., 189 AD3d 441 (1st Dep't 2020)] — this case must be dismissed because plaintiff is neither a shareholder of XP Inc. nor a party who can claim any injury based upon any reliance on anything in the registration statement or the prospectus. During the oral argument the Court, sua sponte, requested plaintiff’s counsel to promptly advise the Court whether plaintiff Gulam Kazi remains the owner of his XP Inc. shares (see February 3, 2021 Interim Order, NYSCEF Doc. No. 107). By letter dated February 5, 2021 (NYSCEF Doc. No. 108), plaintiff’s counsel advised the Court that Mr. Kazi had not purchased the 50 shares of XP Inc. stock he owned pursuant to the initial $27 per share public offering and that instead he had purchased his 50 shares on the open market for more than $40 per share on February 18, 2020 and that he had sold all 50 of his shares at a profit on January 25, 2021. Plaintiff’s counsel obviously recognizes that Mr. Kazi has no standing to represent any XP Inc. shareholders with respect to the XP Inc. initial public offering, and counsel therefore boldly requested in his February 5, 2021 letter that the Court, among other things, substitute another plaintiff for Mr. Kazi, which the Court is not prepared to do by letter request. This case must be dismissed. It is also the case that the parties confirmed in the transcript of proceedings of February 3, 2021 that there is a related class action pending in the United States District Court for the Southern District of New York in which a fully briefed motion to dismiss is awaiting oral argument. Under these circumstances, any newly filed claims by a new plaintiff in state court would not relate back to the now invalid complaint filed by Mr. Kazi. XP Inc. shareholders are not fungible merely because plaintiff’s counsel has more than one client who at some point owned XP Inc. shares. A suit by a new plaintiff would therefore be a pleading filed later in time than the Southern District action. Thus, the appropriate action for this Court to take with respect to any newly filed state court action would be to stay any such action pending the resolution of the related federal action pursuant to the “first filed” rule. Plaintiff is represented by exceptionally capable counsel, and the Court is confident that counsel was unaware of the fact that Mr. Kazi is not a shareholder of XP Inc. and that Mr. Kazi clearly incurred no damages by reason of the registration statement and prospectus challenged in plaintiff’s Amended Complaint. The Court and the defendants have, of course, expended significant resources on this case that should not have been maintained by Mr. Kazi through oral argument on behalf of XP Inc. shareholders that Mr. Kazi has no standing to represent. Accordingly, it is hereby ORDERED that defendants’ motion is granted, and the Clerk of the Court is directed to dismiss this action in its entirety. CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION X GRANTED DENIED GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE Dated: February 8, 2021
