b'inspection and C2B services. The Prospectus alsodefendants state of mind was not relevant, as scienter warned that a failure to provide a differentiated andis not required. The court concluded that statements superior customer service could have a material andin the Registration Statement were neither false nor adverse effect on Uxins business and that Uxin cannotmisleading simply because the 2B Business change guarantee that it can provide such an experience to itsoccurred. The court reasoned that the consolidated customers as its business continued to evolve.amended complaint failed to allege that [ ] anything In an August 22, 2018 press release, Uxin announcedconcerning the inspections and/or the B2 Business that it was shrinking the scope of its 2B Business andwas known or should have been known to be false ceasing to provide inspections and ancillary services toat the time of the IPO, and to the extent that the consumers with car-selling needs in connection with theplaintiffs claim that the offering documents did not C2B sales. That day, Uxins stock price increased by 6%.disclose that dropping these services would result in Thereafter, on November 20, 2018, Uxin issued a pressa corresponding decrease in transactions on its 2B release following its third quarter 2018 earningstheplatform or disclose the magnitude that such a change first quarter reflecting the new exclusion of certain C2Bwould have on the companys business, this claim is services from the 2B Businessreporting that Uxinsdirectly contradicted by the offering documents[.] The transaction volume associated with its 2B Businesscourt also rejected plaintiffs contention that Item 303 of declined 8.5% year-over-year and the associated grossSEC Regulation S-K required Uxin to disclose its post-merchandise value (GMV) declined 14.8% IPO decision to change its 2B Business, reiterating that year-over-year. That day, Uxins ADS price fell 11%. the consolidated amended complaint failed to allege any actual facts to support an inference that defendants Investors filed a putative class action against Uxin,knew of the alteration to Uxins 2B Business or thought certain of its senior executives and directors, and itsit was reasonably likely at the time of the IPO. The court IPO underwriters, alleging violations of the 1933 Act,reiterated that, as the Second Circuit has explained, contending that the Registration Statement misleadinglystatements in offering materials simply reflect company touted Uxins existing business model and servicespolicy at the time that they are made, and are not without disclosing that it was likely to stop providingpromises to maintain that policy in the future or certain C2B services and risks to the businessrendered misleading by the companys subsequent therefrom. Meanwhile, the decreased transactionconsideration of an alternative plan. The court further volume for the 2B Business continued into the fourthheld that such a business strategy decision is not the quarter 2018, which Uxin stated was due to its changetype of decision Item 303 requires, and nonetheless, of approach to its C2B services. the Prospectus disclosed that changes in services and On April 16, 2019, a short-seller entity called J Capitalbusiness strategy was a material risk.Research (J Capital) issued a report claiming that Uxin grossly inflated its revenues, transaction volumes, car values and inventories, and understated its debt load.The court reiterated that, as the Second That day, Uxins stock closed at $1.95 per ADSa 78% decline from the IPO price. On April 22, 2019, UxinCircuit has explained, statements in offering publicly denied the allegations in the J Capital report.materials simply reflect company policy Investors filed a consolidated amended complaintat the time that they are made, and are thereafter, adding allegations based on the J Capital report that the Offering Materials were materiallynot promises to maintain that policy in misleading because they overstated Uxins revenues,the future or rendered misleading by the price of cars sold on Uxins platform, and automobile listing inventory, and understated Uxins debt load.companys subsequent consideration of an Defendants moved to dismiss the complaint which thealternative plan.court denied in part and granted in part. Specifically, in a March 9, 2020 order, the court dismissed the Sections 11 and 12(a)(2) claims predicated upon the 2B Business change, but allowed the claims to proceedHowever, the court allowed plaintiffs claims to proceed based on alleged misstatements regarding Uxinswith respect to alleged misleading statements about financial condition. Uxins financial condition based on the J Capital report. As an initial matter, the court refused to apply aApplying Second Circuit precedent, the court noted heightened pleading standard arising under Newthat federal courts allowed securities claims to go York state law, explaining that the Sections 11 and 12(a) forward at the pleadings stage based on short seller (2) claims are essentially negligence claimsthereports. Although it acknowledged that short seller 79'