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CHIMICLES & TIKELLIS LLP Nicholas E. Chimicles, Pa. Id. No. 17928 Kimberly Donaldson Smith, Pa. Id. No. 84116 Christina Donato Saler, Pa. Id. No. 92017 Benjamin F. Johns, Pa. Id. No. 201373 One Haverford Centre 361 West Lancaster Avenue Haverford, PA 19041 Phone (610) 642-8500 Fax (610) 649-3633 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF PENNSYLVANIA SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY, on behalf of itself and all others similarly situated, Plaintiff, v. ORRSTOWN FINANCIAL SERVICES, INC., ORRSTOWN BANK, ANTHONY F. CEDDIA, JEFFREY W. COY, MARK K. KELLER, ANDREA PUGH, THOMAS R. QUINN, JR., GREGORY A. ROSENBERRY, KENNETH R. SHOEMAKER, GLENN W. SNOKE, JOHN S. WARD, JOEL R. ZULLINGER, and BRADLEY S. EVERLY, Defendants. _________________________________ MEMORANDUM IN SUPPORT OF SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITYS MOTION TO BE APPOINTED LEAD PLAINTIFF AND FOR APPROVAL OF ITS SELECTION OF LEAD COUNSEL Civil Action No. 1:12-cv-00993-YK

ECF

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TABLE OF CONTENTS I. II. III. IV. INTRODUCTION ........................................................................................... 1 PROCEDURAL HISTORY ............................................................................ 4 SUMMARY OF THE FACTS ........................................................................ 6 ARGUMENT ................................................................................................... 9 A. SEPTA Should Be Appointed Lead Plaintiff ........................................ 9 1. The Procedures Required By The PSLRA ..................................... 9 (a) (b) (c) SEPTA Has Complied With The PSLRA ........................... 11 SEPTA Has the Largest Financial Interest In the Action .... 13 SEPTA Otherwise Satisfies Rule 23.................................... 14 (i) SEPTAs Claims Are Typical of the Claims of the Class ............................................................................. 15 (ii) SEPTA Will Adequately Represent the Class .............. 16 2. B. V. Presumption Not Rebutted ........................................................ 18

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

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 Janovici 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,

In its complaint, SEPTA defines two classes: the Securities Act Class which consists of those persons and/or entities who purchased Orrstown common stock in connection with, or traceable to, Orrstowns February 23, 2010 Registration Statement and the March 24, 2010 Prospectus Supplement; and the Exchange Act Class which consists of those persons and/or entities who purchased Orrstown common 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 of reference herein, the classes will be referred to as the Class. The relevant federal securities laws specifically authorize that any Class Member may seek to be appointed lead plaintiff by either filing a complaint or moving for appointment as lead plaintiff. See 15 U.S.C. 77z-1(a)(2)-(3); 15 U.S.C. 78u4(a)(2)-(3). SEPTA has done both. 2
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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. II. PROCEDURAL HISTORY After 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 4

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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). See Saler 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

If SEPTA is appointed Lead Plaintiff, it is expected that an amended complaint will be filed. Several critical and relevant events have taken place at Orrsotwn since the May 25th filing of the initial Complaint that will impact and expand the allegations, including the departure of several executives and officers of the Bank and 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 counsel has conducted an additional investigation relating to the matters raised in the 5

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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. III. SUMMARY OF THE FACTS The 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 are also pertinent to the claims set forth in the Complaint. 6

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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. ARGUMENT

A. SEPTA Should Be Appointed Lead Plaintiff 1. The Procedures Required By The PSLRA The 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 9

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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 most adequate plaintiff in any private action arising under this title is the person or group of persons that (aa) has either filed the complaint or made a motion in response to a notice. . . .; (bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and (cc) otherwise satisfies the requirements of Rule 23 of the Federal 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 putative class 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 PSLRA SEPTA 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., Janovici 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. 78u4(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 Action The 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 13

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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 satisfied each of the Cendant 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 23 The 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. 14

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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; Janovici, 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 Class The 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 16

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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. Janovici, 2003 U.S. Dist. LEXIS 22315 at *38 (relying upon Cendant 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. appointed Lead Plaintiff in this Action. 2. Presumption Not Rebutted The 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 Counsel The 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. For these reasons, SEPTA should be

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. See Saler 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. CONCLUSION For 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 & TIKELLIS LLP /s/ Benjamin F. Johns Nicholas E. Chimicles Kimberly Donaldson Smith Christina Donato Saler Benjamin F. Johns One Haverford Centre 361 West Lancaster Avenue Haverford, PA 19041 Telephone: (610) 642-8500 Fax: (610) 649-3633 nick@chimicles.com kimdonaldsonsmith@chimicles.com cdsaler@chimicles.com bfj@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 wordcount limit.

Date: June 24, 2012

/s/ Benjamin F. Johns Benjamin F. Johns

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

CERTIFICATE OF SERVCIE

I, Benjamin F. Johns, a member of the bar of this Court, hereby certify that true and correct copies of Plaintiffs Motion for 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 24th day of July, 2012, as follows:

David J. Creagan David E. Edwards White and Williams, LLP 1650 Market Street One Liberty Place, Suite 1800 Philadelphia, PA 19103 215-864-7032 Email: creagand@whiteandwilliams.com Email: edwardsd@whiteandwilliams.com

By: /s/ Benjamin F. Johns Benjamin F. Johns (PA 201373) bfj@chimicles.com Chimicles & Tikellis LLP One Haverford Centre 361 West Lancaster Avenue Haverford, PA 19041 Phone: (610) 642-8500 Fax: (610) 649-3633