In Re Green Dot Corporation Securities Litigation 12-CV-06492

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DEC 1 Lionel Z. Glancy (#134180) Robin B. Howald (9110280) Dili 2 Robert V. Prongay (#270796) 3 GLANCY BINKOW & GOLD1ERG LLP 1925 Century Park East, Suite 2100 CLERK 4 Los Angeles, California 90067 5 Telephone: (310) 201-9150 DEC 2 2012 / 6 Facsimile: (310) 201-9160 CENTRAL DISTRICT OF CALIFORNIA 7 Attorneys for Lead Plaintiff Bryan Zee 8 [Additional counsel and plaintiff on signature page] 9 10 UNITED STATES DISTRICT COURT 11 CENTRAL DISTRICT OF CALIFORNIA 12 13 IN RE GREEN DOT Master File No. CV 12-6492-GW CORPORATION SECURITIES (CWx) 14 LITIGATION 15 CLASS ACTION 16 17 CORRECTED1 CONSOLIDATED 18 COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES 19 LAWS 20

21 JURY TRIAL DEMANDED 22 23 24 25 ORIGINAL 26 27 28 'Corrected only to fix typographical and formatting errors. Case 2:12 -CW Document 19 Filed 12/27/12 Page 2 of 82 Page ID #:217

1 TABLE OF CONTENTS 2 3 OVERVIEW...... 1 4 BACKGROUND AND CLASS PERIOD CHRONOLOGY...... 5 5 JURISDICTION AND VENUE...... 15 6 PARTIES...... 15 7 8 CLASS ACTION ALLEGATIONS...... 17 9 SUBSTANTIVE ALLEGATIONS ...... 19 10 COUNT I 11 Violation of Section 11 of the Securities Act (Against All Defendants) ...... 19 12 COUNT II 13 Violation of Section 15 of the Securities Act 14 (Against Defendants Streit and Keatley) ...... 29 15 COUNT III 16 Violation of Section 10(b) of the Exchange Act and Rule 1 Ob-5 Promulgated Thereunder 17 (Against All Defendants) ...... 30 18 Green Dot's Retail Distribution Channel ...... 32 I 19 20 Defendants Touted Green Dot's Exclusive Relationships ...... 33 21 Defendants Stated that Revenue Gains Would Come 22 from Same-Store Sales Growth...... 35 23 Defendants Repeatedly Denied that Competition Posed a Problem ...... 36 24 Retail Competition Began to Intensify by Mid-2011 ...... 38 I 25 26 27

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1 TABLE OF CONTENTS (continued) 2 3 4 Defendants Knew that Green Dot Would Have to Implement More Stringent Risk Controls, Creating a Drag on Growth...... 42 5 Defendants' Materially False and Misleading Statements Regarding 6 Green Dot's Initial 2012 Guidance ...... 44 7 8 Investors Learn of Bluebird's Launch at Walmart...... 47 9 Defendants' Materially False and Misleading Statements Regarding 10 Green Dot's Updated 2012 Guidance ...... 49 11 The Truth Is Revealed When Green Dot Slashes Its 2012 Guidance...... 56 12 Defendants' Inadequate Explanations for 13 Their Unreasonable Guidance...... 58 14 Additional Allegations of Scienter...... 62 15 16 LossCausation ...... 65 17 Presumption of Reliance (Fraud-on-the-Market Doctrine) ...... 68 18 Inapplicability of Safe Harbor ...... 70 19 20 Defendants Violated Section 10(b) of the Exchange Act and Rule lOb-S Promulgated Thereunder...... 70 21 22 COUNT IV Violation of Section 20(a) of the Exchange Act 23 (Against the Individual Defendants) ...... 72 24 PRAYER FOR RELIEF...... 73 25 26 JURY TRIAL DEMANDED ...... 74 27

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1 Lead Plaintiff Bryan Zee ("Lead Plaintiff') and Plaintiff Local No. 38 2 International Brotherhood of Electrical Workers Pension Fund ("IBEW Local 3 38") (together, "Plaintiffs"), by and through their attorneys, and on behalf of all 4 others similarly situated, allege the following upon information and belief, 5 except as to those allegations concerning Plaintiffs, which are alleged upon 6 personal knowledge. Plaintiffs' information and belief are based on, among 7 other things, their counsel's investigation, which includes without limitation: (a) 8 review and analysis of regulatory filings made by Green Dot Corporation 9 ("Green Dot" or the "Company"), with the United States Securities and 10 Exchange Commission ("SEC"); (b) review and analysis of press releases and 11 media reports issued by and disseminated by Green Dot; (c) review of other 12 publicly available information concerning Green Dot and; (d) investigative 13 interviews with persons having first-hand knowledge of Green Dot's operations 14 or those of relevant third parties. 15 OVERVIEW 16 1. This is a class action on behalf of all persons or entities that 17 purchased or otherwise acquired: (i) Green Dot securities between January 26, 18 2012, and July 26, 2012, inclusive (the "Exchange Act Class Period"), seeking 19 to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange 20 Act") and/or (ii) Green Dot securities pursuant and/or traceable to the 21 registration statement issued in connection with the Company's initial public 22 offering in July 2010 (the "IPO" or "Offering"), seeking to pursue remedies 23 under the Securities Act of 1933 (the "Securities Act"). The "Class" (as defined 24 below in paragraphs 47, 48) includes all persons who purchased or otherwise 25 acquired Green Dot securities during the Exchange Act Class Period or pursuant 26 and/or traceable to the registration statement issued in connection with the IPO, 27 and were damaged thereby. 28

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1 2. Green Dot is the leader in the general purpose reloadable ("GPR") 2 prepaid card industry. GPRs enable millions of Americans without bank 3 accounts or credit cards to make purchases or pay bills by means other than an 4 actual surrender of cash. Green Dot also established and operates a network by 5 which its card holders and holders of other similar cards can add funds to their 6 cards (referred to as "reloading"). Green Dot's revenues are generated by fees 7 associated with the purchase, use, maintenance, and reloading of GPRs. 8 3. Pioneering the industry in 2001, for years Green Dot enjoyed either 9 contractual or de facto exclusivity, being the only card of its kind on retailers' 10 shelves. By the time of its IPO, in July 2010, Green Dot products were sold in 11 50,000 locations, including at least nine of the nation's major chains. Green 12 Dot's "first-corner" status and its dominant retail footprint enabled Green Dot's 13 operating revenues to rapidly grow, from $39.5 million, in 2005, to $234.8 14 million in 2009. 15 4. While other competitive GPR cards existed, it was Green Dot's 16 exclusivity in the retail channel that undergirded its dominance in the industry. 17 As the Company explained in its comment letter to the SEC dated January 18, 18 2012: "[M]ost GPR cards are purchased at retail stores making the relative 19 distribution of the products critical to the success of a GPR card program; a 20 GPR card that is attractively priced but with limited distribution (e.g. online 21 only) is unlikely to have a material impact on competitors with broader 22 distribution." 23 5. Green Dot is the brain-child of Steven Streit, its CEO, President 24 and Chairman. However, Streit's background was in radio, not banking or retail 25 sales. While CFO John Keatley holds an MBA from Harvard, having only 26 worked for three years as a management consultant, he had never held a 27 position of authority at a public company before joining Green Dot. 28 Consequently, after the competitive landscape radically changed in mid-2011,

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1 with large financial institutions and credit card companies joining the field and 2 offering retailers large premiums in exchange for shelf space, Streit and Keatley 3 gave objectively unreasonable guidance when they forecasted, inter al/a, that 4 the Company's 2012 revenue growth would be in the range of 20-24% and that 5 the gross dollar value loaded onto Green Dot cards ("GDV") would increase by 6 30%. 7 6. While touting Green Dot's exclusive and stable distributor 8 relationships, including with Walmart, responsible for more than 60% of the 9 Company's revenues, defendants withheld contract renewal dates and both the 10 existence of contractual exclusivity and the exact nature of such exclusivity 11 from the market. However, defendants assured investors that major contract 12 renewals occurred on a rolling basis, such that there was no single date of 13 importance. When defendants provided guidance for fiscal year 2012 14 ("FY'12") on January 26, 2012, and affirmed most of their guidance on April 15 26, 2012, they knew but did not publicly disclose that Green Dot's "exclusivity" 16 with Walmart did not prevent Walmart from partnering with American Express 17 to sell a GPR; nor did they disclose that contract renewals with Waigreens and 18 CVS were due in 2012, raising the significant possibility that Green Dot would 19 lose exclusivity at those retailers. 20 7. Just as Green Dot's supremacy in the retail sales channel was about 21 to be threatened as never before, the Company also faced a crisis concerning an 22 issue which it failed to disclose to investors at the time of the IPO. Compared 23 to bank accounts and credit cards, customers must provide less personal 24 identifying information to activate Green Dot cards; indeed, the initial loaded 25 value on Green Dot cards can be used anonymously. As a result, a portion of 26 Green Dot's revenues are generated as a result of legally purchased cards and 27 MoneyPaks being used for either illicit purposes or as payment to con artists 28 who prey on innocent victims. Defendants were aware of the former problem

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1 by 2009, when law enforcement informed them that Green Dot cards were being 2 used to extort protection money from prison inmates. Regarding the latter 3 problem, although Green Dot warns customers about scams on its website, until 4 a particular scam is uncovered and widely publicized, Green Dot earns fees 5 I from its innocent victims. 6 8. Following Green Dot's purchase of a bank holding company and 7 bank in December 2011 and in response to a massive fraud associated with tax 8 refunds issued by the IRS on Green Dot cards, in the first and second quarters 9 of 2012, Green Dot significantly strengthened its fraud and risk controls. 10 Although never disclosed to investors at the time of the IPO, such measures 11 would likely result in a significant loss of revenues. 12 9. Green Dot slashed its FY'12 revenue guidance in half on July 26, 13 2012, citing a complete lack of visibility. The sudden uncertainty was 14 attributed to the end of exclusivity at three of its five major distribution partners 15 and decreased activation and card use fees as the new risk controls flagged and 16 declined suspicious activities. Analysts were stunned, as defendants led them to 17 believe that 2012 guidance had taken into account increased competition and 18 potential key contract changes for 2012 renewals. Also, given Green Dot's 19 representations about its ever-improving risk controls and secure network, the 20 market was taken aback by the lost revenue stream attributed to the new 21 measures. In light of defendants' newfound paucity of knowledge concerning 22 the direction of Green Dot's business, one analyst even asked Streit whether he 23 considered replacing himself as CEO with a knowledgeable executive. 24 Numerous analysts declared that management now lacked credibility. 25 10. In response to the reduced guidance (and the reasons given for it) 26 and mistrust in management, on July 27, 2012, Green Dot's shares lost 61% of 27 their value, causing significant damages to investors. 28

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1 BACKGROUND AND CLASS PERIOD CHRONOLOGY 2 11. For more than ten years, Green Dot's innovative retail product, the 3 GPR prepaid card, has provided widely-distributed, low-cost payment solutions

4 to a broad base of domestic consumers. Uoon ourchase. the owner lnadc ecich 5 value onto the card in one of several ways, e.g., cash payment or automatic 6 check deposit, and uses the card, branded with a MasterCard or VISA logo, as 7 one would use a debit card. Green Dot's revenue stream from GPRs is 8 primarily comprised of activation and monthly maintenance fees and from 9 "interchange fees," i.e., the fees paid by merchants for the privilege of accepting 10 credit cards. Green Dot also owns and operates a network whereby holders of 11 its GPR cards as well as prepaid cards issued by other companies can, for a fee, 12 reload their GPR cards via the purchase of Green Dot's MoneyPaks. 13 12. After the dawn of online shopping, in the mid-1990s, defendant 14 Streit conceived of GPRs as a means for teenagers, who generally do not 15 possess credit cards, to shop online. However, when the Company's first major 16 vendor, Rite Aid, began selling Green Dot cards in 2001, Streit soon recognized 17 that Green Dot's GPRs were primarily purchased by adults who either did not 18 have traditional bank accounts (the "unbanked") or who supplemented banking 19 account transactions with non-bank transactions conducted by alternative 20 financial services providers (the "underbanked"). Additionally, with banks' 21 fees and monthly charges ballooning, Green Dot also provided an alternative for 22 those earning under $75,000, for whom traditional checking accounts had 23 become simply too expensive. Over the last decade, Green Dot became the 24 industry leader in serving these markets. 25 13. In recent years, Congress has enacted pro-consumer legislation that 26 limited the amounts of various fees charged by banks. However, prepaid cards 27 were expressly excluded from the scope of the legislation. Consequently, 28 traditional banks entered the GPR arena, such as JP Morgan Chase, with its

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1 "Liquid" card, and US Bank, with its "Convenient Cash" card. Other entrants 2 included traditional credit card companies, such as American Express, with 3 GPRs that include the benefits traditionally associated with its credit cards, e.g., 4 roadside assistance, purchase protection, and entertainment access. In addition 5 to serving the unbanked and underbanked, these new entrants sought to target 6 young professionals who have come of age in the paperless transaction era. 7 14. As financial giants entered the space, and the number of card 8 providers mushroomed, Green Dot's success, and indeed its long-term survival, 9 would be driven by the number and variety of locations in which its cards are 10 available for purchase. Although Green Dot's GPRs are offered in a number of 11 different venues, such as Kroger's supermarkets and Radio Shack, since the 12 Company's inception, its contracts with a handful of national chain stores have 13 accounted for upwards of 80% of its revenues. Green Dot's top retailers 14 included Walmart, Walgreens, CVS, Rite Aid, and 7-Eleven. At the time of the 15 IPO, certain of Green Dot's relationships with national retailers were exclusive 16 in some manner, either de facto or by contract. Green Dot's most important 17 relationship is with Walmart, the source of more than 60% of Green Dot's 18 revenues. 19 15. Within a year of the IPO, however, competition for shelf space at 20 Green Dot's largest distributors intensified. In mid-2011, American Express 21 had begun to issue prepaid cards and launched a pilot program at WalMart, the 22 "Bluebird" card, that fall. Also by mid-2011, Green Dot's recognized rival, 23 NetSpend, lost three of its check-cashing company distribution partners and was 24 aggressively looking to expand into Green Dot's retail territory. In October 25 2011, NetSpend entered into a deal with 7-Eleven, a Green Dot partner since 26 2009, to expand its pre-paid card reload network. A prepaid card distribution 27 deal between NetSpend and 7-Eleven followed just three months later. Western 28

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1 Union, the "granddaddy" of non-bank money transfer companies, also signed a 2 GPR card distribution deal with 7-Eleven in October 2011. 3 16. By January 26, 2012, when defendants issued their initial FY'12 4 guidance, they knew but did not disclose that contract renewal with several of 5 Green Dot's major distributors, at whose stores Green Dot had previously 6 enjoyed card sale exclusivity, came due in a matter of months. By no later than 7 April 26, 2012, defendants also knew that it was highly likely that American 8 Express, Netspend, and/or Western Union, would be given the opportunity to 9 enter into deals with these distributors upon expiration of Green Dot's then- 10 current contracts Indeed, rival NetSpend's Reload Packs were already on sale 11 at Walgreens by the first half of 2012. 12 17. Also in the fall of 2011, a lucrative two-year deal with Intuit came 13 to an end. The agreement allowed users who filed tax returns with the IRS 14 using TurboTax software to receive their tax refunds on Green Dot cards. Just 15 as the program was expiring, sporadic news reports began to surface that 16 criminals may have bilked the government of hundreds of millions of dollars - 17 with $130 million attributed to one Tampa, Florida scheme alone -. by filing 18 false tax returns and requesting refunds on Green Dot cards. Once the Green 19 Dot cards were delivered to the fraudulent filers, the cards were immediately 20 drained of their value at ATMs. A Tampa detective testifying before a Senate 21 subcommittee described pervasive criminal activity: "Postal workers have been 22 threatened concerning the delivery of fraudulent tax return checks, FedEx 23 stopped delivering Green Dot tax return debit cards and citizens have been 24 threatened to stay away from their mailboxes." Although Green Dot terminated 25 its business partnership with TurboTax, tax refunds continued to be a part of the 26 Company's business. 27 18. Long before the tax refund scam, other illicit activity, e.g., use of 28 Green Dot MoneyPak reloads to make extortion payments or a scam involving

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1 payment via MoneyPaks to secure government grants, was apparently being 2 conducted by means of Green Dot cards. Consequently, a percentage of Green 3 Dot's revenues were unsustainable, as they were generated as the result of 4 illegal activities. However, the Company's IPO Registration Statement and 5 Prospectus disseminated to investors (the "Registration Statement" or the 6 "Offering Materials") did not disclose this fact. Instead, it described redundant security measures to protect against identity theft - such as was perpetrated by 8 the tax refund scam - and additional procedures to comply with anti-money 9 laundering and anti-terrorism legislation and regulations. None of Green Dot's 10 risk warnings told investors that an unknown portion of Green Dot's revenue 11 stream was a result of illegal activities and would necessarily be curtailed by the 12 heightened security measures to be adopted once Green Dot became a bank 13 holding company. Only at the end of the Exchange Act Class Period did 14 defendants affirmatively state that new screening procedures uncovered and 15 declined improper uses of Green Dot cards and that such screening had a 16 negative impact on business. 17 19. Into this maelstrom of competition, the loss of Intuit's TurboTax 18 refund program, and the need to tighten security measures after the bank deal 19 closed in December 2011 and the tax refund fraud came to light, defendants 20 announced lofty annual guidance for 2012. Specifically, on January 26, 2012, 21 the Company announced that it expected both non-GAAP total operating 22 revenues and adjusted EBITDA to grow 20-24%, year-over-year in FY'12. 23 Both the average number of active cards and cash transfers were expected to 24 grow 20% or more, growth of 30% was predicted for gross dollar volume 25 ("GDV"), i.e., the total amount of funds loaded to GPR cards and reload 26 products. The Company specifically stated that this outlook for 2012 was 27 "based on a number of assumptions that Green Dot believes are reasonable at 28 the time of this earnings release."

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1 20. Defendants confirmed Green Dot's FY'12 guidance for non-GAAP 2 total operating revenues and other growth metrics on April 26, 2012, when 2 3 Green Dot announced its Q1'12 results of operations. 3 Again, the Company 4 specifically stated that its outlook for 2012 was "based on a number of 5 assumptions that Green Dot believes are reasonable at the time of this earnings 6 release." 7 21. During a conference call held that same day, Streit and Keatley 8 presented Green Dot's Q1'12 results by providing two sets of figures - actual 9 results and results excluding the (now discontinued) Intuit revenue from its 10 year-over-year analysis. Despite some encouraging trends when Intuit revenue 11 was removed from the analysis, some analysts questioned the retention of 12 guidance in light of Green Dot's actual growth, i.e., non-GAAP total operating 13 revenues up 18%, active card growth up 10%, and GDV up 5%. When 14 specifically confronted with the 5% GDV figure, Keatley conceded that 15 acceleration would have to occur during the remainder of the year, but 16 ultimately stated that the Company "appears to be on track" to achieve 30% 17 GDV growth. 18 22. Similarly, when questioned about the effect of increasing side-by- 19 side competition, Streit stated that based upon his discussions with retailers and 20 the "time honored" notion that increased shelf space for an entire category 21 would benefit all players, thus far "we seem okay." However, he admitted that 22 the Company studies hypothetical competition with a particular product and 23

24 2 Throughout the Complaint, plaintiffs use terms such as "Qi '12" to refer to 25 specific reporting periods. "Q" stands for quarter, with the following numeral 26 representing the quarter and the final two numerals indicating the year. The adjusted EBITDA and non-GAAP EPS forecast was reduced to take into 27 account future operating expenses associated with Green Dot's acquisition of 28 Loopt, Inc. in Q1'12.

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1 sometimes worries that competitors could take "a proportional bite out of total 2 sales." Apologizing for his inability to provide a more definitive answer, Streit 3 explained that this was because there were so few head-to-head comparisons - 4 he mentioned only 7-Eleven and Blackhawk stores, where Green Dot and 5 NetSpend cards both were sold - to draw upon, and indicated that "we'll have 6 more data to look at it a year from now or two years from now." As the "first 7 and largest player in [a] category that is underpenetrated," however, Streit 8 ultimately concluded "so far, so good." 9 23. From the time Green Dot went public, the "rising tides lifts all 10 boats" analogy had been Streit's mantra during earnings calls or at investment 11 conferences. Sometimes admitting that it is in the nature of the industry pioneer 12 to slightly fear competition, Streit referred to himself as a "contrarian" in this 13 regard: Green Dot welcomed competitors into the field, in particular high- 14 profile banks, because competition from traditional financial services providers 15 would give the GPR segment of the financial services industry greater exposure 16 and customer awareness, which would ultimately redound to the benefit of 17 Green Dot, the largest player in the still-underpenetrated market. Having heard 18 this refrain for almost two years, investors and analysts were in no way alarmed 19 by Streit's inability to be more specific. 20 24. On another topic, Keatley informed the market that Green Dot's 21 strengthening of "customer identification" processes would cause "some 22 pressure on the growth of our new card activation and GDV." When asked to 23 put a price tag on the expected negative impact on growth of these metrics, 24 Keatley could not do so, replying that "it is very difficult to quantify ... before 25 you see the impact." 26 25. As noted above, with the exception of EBITDA and EPS guidance 27 (due to expenses associated with the acquisition of a mobile access company), 28 defendants affirmed full-year guidance despite: (1) admitting that it was not

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1 possible to assess the impact of either new customer identification measures or 2 head-to-head competition, and (2) Q1'12 figures having already fallen short of 3 the predicted growth percentages for the year. Neither analysts nor investors 4 saw cause for alarm: Between April 25, 2012, and April 27, 2012, Green Dot's 5 share price rose slightly, from $25.79 to $26.29. 6 26. Suddenly, on July 26, 2012, after the market closed, Green Dot 7 released its Q2'12 results and disclosed that it was drastically slashing its 8 previously-issued FY'12 forecast for two reasons: "the impact of new internal 9 risk policies and controls to improve the security and quality of [Green Dot's] 10 portfolio"; and "by later this year, many of [the Company's] retailers will start 11 to sell competitive GPR products in addition to [Green Dot's] products." 12 Moreover, the Company admitted that "[b]ecause we lack the historical data to 13 accurately predict how [the new competition] will impact [Green Dot's] sales, 14 we have taken what we believe to be a conservative view of any potential 15 I impact." 16 27. Despite posting a 17% increase in non-GAAP total operating 17 revenues, an 8% increase in active cards, and a 10% GDV increase (year-over- 18 year) in Q2'12, defendants cut projected non-GAAP total operating revenue 19 growth for fiscal 2012 in half, to just 10-12%. Similarly, EPS guidance was 20 greatly reduced from a range of $1.65-1.70, to a range of $1.29-1.32. Full year 21 active card growth was slashed to a mere 5%. 22 28. During the Q2'12 earnings conference call, defendants explained 23 why they took such drastic measures: "[S]everal new competitive products 24 could be on sale next to Green Dot products at many of our current retail 25 distribution locations later this year or next year." Despite having earlier stated 26 that competition would likely increase sales for all participants and that the 27 existence of competitive data was still a year or two away, Streit shocked the 28 market by stating that the new FY'12 guidance was predicated upon the

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1 assumption that, during the remainder of the year, "we lose some portion of our 2 unit sales at most of our major retailers." (Emphasis added.) Keatley echoed 3 this about-face concerning the effect of head-to-head competition stating: 4 "[W]e're in the middle of. . . different deal negotiations at two of our top five 5 retailers . . . In our forecast, we've assumed that everybody would be doing 6 something that could be injurious to our business.. . ." (Emphasis added.) 7 29. With respect to the impact of risk controls on guidance, Keatley, 8 who in Q1'12 affirmed GDV growth of 30% despite confessing that the impact 9 of new risk control and security procedures was unknown, suddenly announced 10 J that Green Dot would no longer provide GDV guidance. To the surprise of 11- analysts and investors, he predicted that the new security and risk control 12 measures only in place for slightly more than one quarter - would have a 5- 13 10% impact on the growth of Green Dot's overall portfolio. 14 30. The market was stunned. In light of the results for the first half of 15 FY'12 and the drastically-lowered guidance, analysts' first question to Streit 16 during the Q2'12 call was whether Green Dot had considered replacing him as 17 CEO with "a payment operator to run the company." When asked why the 18 negative effect of competition was predicted to be so severe, Streit revealed that 19 while the Company's prior head-to-head competition had been limited, it was 20 not, as previously stated, "so far, so good." Rather, he admitted: "where we've 21 seen new competition in the past, we've seen our new card sales take a 22 significant hit ... our active cards continue to grow but at a much slower rate." 23 31. Regarding the security and risk controls issue, Streit made another 24 startling admission. First, he assured investors that there have always been 25 "customer identification processes" in place and that the new procedures "just 26 rachet it up a few notches." Then Streit indicated that the reason for the 27 lowered guidance after Green Dot's implementation of new controls in late 28 Q1'12 was that "it wasn't just ID verification [that weighed upon growth], it's

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1 also just how people use the card and trying to spot usage that ... it was [J used 2 improperly ... for something that we don't want it used for." 3 32. For the first time, investors were made aware that identity fraud 4 was not the only risk that could negatively impact sales. Rather, defendants 5 disclosed that use of the card for illicit activity was subject to new screening in 6 late Q1'12 and 12 and that they immediately noted that a portion of Green 7 Dot's revenue came from "something that we don't want [cards] used for." To 8 the extent Green Dot's past organic growth had been based, in part, on revenues 9 derived from illegal activities now being rejected, investors first came to 10 understand that the Company's prospects would be diminished as a result. 11 33. The Company's 180-degree turn on the issue of competition was 12 not lost on analysts, several of whom castigated management the next day: 13 a. Stern Agree commented: 14 "Management noted that a handful of its key retail partners that 15 previously only sold GreenDot's cards will be selling competitors' 16 cards, namely NetSpend (which includes PayPal-branded cards), Western Union, and American Express. We have been well aware of 17 NetSpend's success in signing new partners and Western Union 18 noted on its recent call that it will be launching with new partners 19 soon. We had thought Green Dot contemplated this competition in its prior guidance ... (Emphasis supplied.) 20

21 b. JMIP Securities similarly noted: 22 The company's commentary relating to their admission that retail 23 exclusivity, either contractual or in practice, is coming to an end 24 seemed quite abrupt. They have not shied away in the past from 25 admitting that the prepaid industry will evolve competitively, but we also heard familiar refrains from management just afew months ago 26 about the strength of their retail relationships and the general 27 stability of terms in recent contract renewals. Did the world turn on a dime over the past 90 days? It seemed that way based on the 28

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1 conference call, although there was no clear explanation as to why (Emphasis supplied.) 2 3 34. Analysts also took issue with the disclosures surrounding the new 4 security measures, with one analyst pointedly complaining about the "lack of 5 clarity" regarding the sudden need for additional controls. That analyst, from 6 iMP securities, obtained an additional explanation from management: "The 7 company's rejection rate of new attempted activations has risen by about 200 8 basis points over the past year (rates are in the double digits) and there have 9 also been rising rejections of reloads and more suspicious activity being 10 flagged." (Emphasis supplied.) An analyst from Jefferies expressed the belief 11 "that regulatory scrutiny/pressure played a role in GDOT's decision to 12 implement stricter risk controls (though we acknowledge management's 13 commentary that the decision was internal)." 14 35. A number of analysts stated that management misled the market 15 regarding both Green Dot's ability to withstand head-to-head competition and 16 the circumstances surrounding the additional risk controls. Moreover, several 17 analysts commented that the market could no longer trust Green Dot's 18 management: 19 Jefferies: "We also believe an increasing credibility gap between 20 investors and mgmt may make it difficult to improve negative 21 sentiment in the near term." 22 Deutsche Bank: "With the management team's credibility in question, we 23 would encourage the company to inject new executive leadership with payment industry experience." 24

26 ' The criticism from Deutsche Bank was particularly harsh in light of the fact 27 that Green Dot's Vice President of Investor Relations, Christopher Mammone, 28 had joined Green Dot in the fall of 2011, after working for 10 years as an equity analyst at Deutsche Bank (covering Green Dot during his tenure).

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1 36. As a result of defendants' wrongful acts and omissions, Green 2 Dot's securities suffered a precipitous decline in the market value. Plaintiffs 3 and other Class members have suffered significant losses and damages. 4 JURISDICTION AND VENUE 5 37. The claims asserted herein arise under Sections 10(b) and 20(a) of 6 the Exchange Act (15 U.S.C.78j(b) and 78t(a)) and Rule lOb-5 promulgated 7 thereunder by the SEC (17 C.F.R. § 240.10b-5), as well as Sections 11, 12, and 8 15 of the Securities Act (15 U.S.C. § § 77k, 771, and 77o). 9 38. This Court has jurisdiction over the subject matter of this action 10 pursuant to 28 U.S.C. §1331 and Section 27 of the Exchange Act (15 U.S.C. 11 §78aa) and 22 of the Securities Act (15 U.S.C. § 77v). 12 39. Venue is proper in this Judicial District pursuant to 28 U.S.C. 13 §1391(b) and Section 27 of the Exchange Act (15 U.S.C. §78aa(c)) and Section 14 22 of the Securities Act. Substantial acts in furtherance of the alleged fraud or 15 the effects of the fraud have occurred in this Judicial District. Many of the acts 16 charged herein, including the preparation and dissemination of materially false 17 and/or misleading information, occurred in substantial part in this Judicial 18 IDistrict. 19 40. In connection with the acts, transactions, and conduct alleged 20 herein, defendants directly and indirectly used the means and instrumentalities 21 of interstate commerce, including the United States mail, interstate telephone 22 communications, and the facilities of a national securities exchange. 23 PARTIES 24 41. Lead Plaintiff Bryan Zee, as set forth in his previously-filed 25 certification (Dkt# 1), incorporated by reference herein, purchased Green Dot 26 common stock on the open market during the Exchange Act Class Period, and 27 suffered damages as a result of the federal securities law violations and false 28 and/or misleading statements and/or material omissions alleged herein.

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1 42. Plaintiff IBEW Local 38 purchased Green Dot common stock 2 pursuant and/or traceable to the registration statement issued in connection with 3 the IPO (as set forth in the certification annexed hereto as Exhibit 1), and 4 suffered damages as a result of the federal securities law violations and false 5 and/or misleading statements and/or material omissions alleged herein. IBEW 6 Local 38 purchased Green Dot common stock before the effective date of the 7 Company's secondary public offering on December 7, 2010, and during the 8 Company's 180-day lockup period. 9 43. Defendant Green Dot is a Delaware corporation with its principal 10 executive offices located at 605 East Huntington Drive, Suite 205, Monrovia, 11 California, 91016. 12 44. Defendant Steven W. Streit ("Streit") was, at all relevant times, 13 Chairman of the Company's Board of Directors, President, and Chief Executive 14 Officer ("CEO") of Green Dot. Streit executed Green Dot's Form S-i, filed 15 February 26, 2010, as well as all amendments thereto, in conjunction with 16 Green Dot's initial public offering. During all relevant times, Streit also 17 executed Green Dot's annual reports filed with the SEC on Form 10-K. 18 45. Defendant John L. Keatley ("Keatley") was, at all relevant times, 19 the Chief Financial Officer ("CFO") of Green Dot. Keatley executed Green 20 Dot's Form S-i, filed February 26, 2010, as well as all amendments thereto, in 21 conjunction with Green Dot's initial public offering. At all relevant times, 22 Keatley also executed Green Dot's annual reports filed with the SEC on Form 23 10-K and its quarterly reports filed on Form iO-Q. 24 46. Defendants Streit and Keatley are collectively referred to as the 25 "Individual Defendants." The Individual Defendants, because of their positions 26 with the Company, possessed the power and authority to control the contents of 27 Green Dot's reports to the SEC, press releases, and presentations to securities 28 analysts, money and portfolio managers, and institutional investors, i.e., the

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1 market. Each Individual Defendant was provided with copies of the Company's 2 reports and press releases alleged herein to be misleading prior to, or shortly 3 after, their issuance and had the ability and opportunity to prevent their issuance 4 or cause them to be corrected. Because of their positions and access to material 5 non-public information available to them, each Individual Defendants knew that 6 the adverse facts specified herein had not been disclosed to, and were being 7 concealed from, the public, and that the positive representations which were 8 being made were then materially false and/or misleading. The Individual 9 Defendants are liable for the false statements pleaded herein, as those 10 statements were each "group-published" information, the result of the collective 11 actions of the Individual Defendants. 12 CLASS ACTION ALLEGATIONS 13 47. This is a class action on behalf of all persons or entities that 14 purchased or otherwise acquired: (i) Green Dot securities during the Exchange 15 Act Class Period (i.e., between January 26, 2012, and July 26, 2012, inclusive), 16 seeking to pursue remedies under the Exchange Act; and/or (ii) Green Dot 17 common stock pursuant and/or traceable to the registration statement issued in 18 connection with the Company's IPO on July 21, 2010, seeking to pursue 19 remedies under the Securities Act. The Class includes all persons who 20 purchased or otherwise acquired Green Dot securities during the Exchange Act 21 Class Period or pursuant and/or traceable to the registration statement issued in 22 connection with the IPO, and were damaged thereby. 23 48. Excluded from the Class are defendants, the officers and directors 24 of the Company, at all relevant times, members of their immediate families and 25 their legal representatives, heirs, successors or assigns and any entity in which 26 defendants have or had a controlling interest. 27 49. The members of the Class are so numerous that joinder of all 28 members is impracticable. From the Company's IPO through the end of the

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1 Exchange Act Class Period, Green Dot's securities were actively traded on the 2 New York Stock Exchange (the "NYSE"). While the exact number of Class 3 members is unknown to Plaintiffs at this time and can only be ascertained 4 through appropriate discovery, Plaintiffs believe that there are hundreds or 5 thousands of members in the proposed Class. From the Company's IPO 6 through the end of the Exchange Act Class Period, millions of Green Dot shares 7 were traded publicly on the NYSE. As of April 30, 2012, the Company had 8 30,417,707 shares of Class A common stock and 5,170,556 shares Class B 9 common stock outstanding. Record owners and other members of the Class 10 may be identified from records maintained by Green Dot or its transfer agent 11 and may be notified of the pendency of this action by mail, using the form of 12 notice similar to that customarily used in securities class actions. 13 50. Plaintiffs' claims are typical of the claims of the members of the 14 Class as all M'embers of the Class are similarly affected by defendants' wrongful 15 conduct in violation of federal law that is complained of herein. 16 51. Plaintiffs will fairly and adequately protect the interests of the 17 members of the Class and has retained counsel competent and experienced in 18 class and securities litigation. 19 52. Common questions of law and fact exist as to all members of the 20 Class and predominate over any questions solely affecting individual members 21 of the Class. Among the questions of law and fact common to the Class are: 22 a. Whether the federal securities laws were violated by 23 defendants' acts as alleged herein; 24 b. Whether statements made by defendants to the investing 25 public in the IPO offering documents and, in addition, representations 26 during the Exchange Act Class Period omitted and/or misrepresented 27 material facts about the business, operations, and prospects of Green Dot; 28 and

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1 C. To what extent the members of the Class have sustained 2 damages and the proper measure of damages. 3 53. A class action is superior to all other available methods for the fair 4 and efficient adjudication of this controversy since joinder of all members is 5 impracticable. Further, as the damages suffered by individual Class members 6 may be relatively small, the expense and burden of individual litigation makes it 7 impossible for members of the Class to individually redress the wrongs done to 8 them. There will be no difficulty in the management of this action as a class I action. 10 SUBSTANTIVE ALLEGATIONS 11 COUNT I 12 Violation of Section 11 of the Securities Act 13 (Against All Defendants) 14 54. Plaintiffs bring this claim on behalf of themselves and other 15 members of the Class who purchased Green Dot securities pursuant to or 16 traceable to the IPO. Each Class Member acquired securities pursuant to or 17 traceable to the Offering Documents filed in conjunction with the IPO. As a 18 result of materially false and/or misleading statements in and/or omissions from 19 these documents, Plaintiffs and the Class purchased Green Dot's securities at 20 artificially inflated prices. Green Dot's share price declined significantly in 21 response to a disclosure which revealed adverse facts concerning Green Dot's 22 business and/or financial condition that defendants negligently misstated, 23 thereby causing damages to Plaintiffs and the Class. 24 55. Defendants' liability under this Count is predicated on the 25 negligence of each Defendant in conducting Green Dot's IPO pursuant to the 26 Registration Statement, which contained untrue statements and omissions of 27 material fact, and in failing to recognize and correct those misstatements and 28 omissions. This claim is brought pursuant to Section 11 of the Securities Act

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1 and does not contain any allegations sounding in fraud. For the purposes of 2 Count I, Plaintiffs and the Class affirmatively state that they do not allege that 3 defendants engaged in knowing or deliberately reckless conduct or that they 4 acted with scienter or fraudulent intent. 5 56. Plaintiffs incorporate by reference, as if set forth in full, the 6 allegations contained in paragraphs 2-55, above. 7 57. On February 26, 2010, the Company filed a Registration Statement 8 on Form S-i with the Securities and Exchange Commission (the "SEC"). 9 Following several amendments, the IPO became effective on July 21, 2010, and 10 the Prospectus was filed on July 22, 2010. (These documents are collectively 11 referred to as "the IPO Offering Documents" or the "IPO Registration 12 I Statement"). 13 58. The IPO Registration Statement contains quite a number of 14 statements which indicated to investors that Green Dot employed abundant 15 precautions, including purchasing applications developed by third-parties and 16 contracting the services of large outside vendors, to ensure that Green Dot cards 17 would not be illegally or improperly used. These statements include the 18 following: 19 20 a. "Our technology platform, Green PlaNET, provides essential functionality, including point-of-sale connectivity and 21 interoperability with Visa, MasterCard and other payment or funds 22 transfer networks, and compliance and other capabilities to our Green Dot Network, enabling real-time transactions in a secure 23 environment." 24 b. Proprietary Technology. Green PlaNET, our centralized 25 processing platform, includes a variety of proprietary software 26 applications that, together with third-party applications, run our front-end, back-end, anti-fraud, regulatory compliance and customer 27 service processing systems. 28

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C. "Our centralized technology platform, Green PlaNET, connects all network participants ... enabling real-time transactions 2 across the Green Dot Network through a single and secure point of 3 integration and connectivity ... Green PlaNET includes a variety of proprietary software applications that, together with third-party 4 applications, run our front-end, back-end, anti-fraud, regulatory 5 compliance and customer service processing systems." 6 d. "Green PlaNET gives us the ability to centrally develop, distribute and support product applications, manage customer 7 accounts, authorize, process and settle transactions, enable security 8 and regulatory compliance, and provide customer services through 9 the Internet, IVR, call centers, mobile applications and email." 10 e. "The Green PlaNET front-end processing system enables our reload network to interoperate with funds transfer 11 networks and engages in real-time transaction verification so that 12 cards do not exceed applicable limits, thus ensuring compliance with our anti-money laundering program." 13 f. "The Green PlaNET back-end processing system 14 executes a variety of transaction-enabling processes and initiates 15 several customer verification modules, such as internally developed 16 anti-money laundering, "Know Your Customer" and Office of Foreign Assets Control requirements, and external data requests from 17 outsourced vendors, such as Experian and LexisNexis, that together 18 ensure compliance with all federal requirements for the opening of a new account ... In addition, the Green PlaNET back-end processing 19 system houses a variety of security applications that provide 20 customer and card data encryption, fraud monitoring, information security administration and firewalls that protect the Green PlaNET 21 infrastructure." 22 g. "Some services relating to our business, including fraud 23 management and other customer verification services, transaction 24 processing and settlement, card production and customer service, are outsourced to third-party vendors, such as Total System Services, 25 Inc. for card processing and Genpact International, Inc. for call 26 center services." 27 59. In addition, a section entitled "Regulation" describes Green Dot's 28 continuous efforts to modify its business operations and compliance procedures

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1 Ito ensure adherence to the ever-changing laws and regulations applicable to its 21 I business: 3

4 Compliance with legal and regulatory requirements is a highly complex and integral part of our day-to-day operations. Our products 5 and services are generally subject to federal, state and local laws and 6 regulations, including:

7 anti-money laundering laws;

8 money transfer and payment instrument licensing regulations;

9 escheatment laws;

10 privacy and information safeguard laws; bank regulations; and 11 • consumer protection laws. 12 * * * 13 We continually monitor and enhance our compliance program to stay 14 current with the most recent legal and regulatory changes. We also 15 continue to implement policies and programs and to adapt our business 16 practices and strategies to help us comply with current legal standards, as well as with new and changing legal requirements affecting particular 17 services or the conduct of our business generally. These programs include 18 dedicated compliance personnel and training and monitoring programs, as well as support and guidance to our retail distributors and network 19 acceptance members on compliance programs. 20 60. In the risk warning section of the IPO Registration Statement, 21 Green Dot discussed the tight regulation of its business, specifically explaining 22 that Green Dot's operations were expressly subject to anti-money-laundering 23 and anti-terrorism laws. Consequently, defendants warned of the risks 24 associated with: (1) more stringent government regulation of its current line of 25 business, e.g., new regulations to be adopted by the U.S. Treasury's Financial 26 Crimes Enforcement Network ("FinCEN"); (2) additional capital requirements 27 and business limitations applicable to Green Dot once the Bonneville Bank 28 transaction closed; and (3) changes to banking laws, future limitations on the

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1 various fees charged by Green Dot, and possible regulation of the prepaid card 2 industry by the Consumer Financial Protection Bureau. 3 61. In addition to the risk warnings concerning current and potential 4 future regulation and restrictions, Green Dot also issued several risk warnings 5 pertaining to the impact of negative publicity concerning the unlawful use of its 6 cards or those of its industry peers. 7 62. All of these risk warnings concerning illegal use, however, focused 8 upon fraud, counterfeiting and identity theft arising from security breaches or 9 insufficient identification verification procedures by Green Dot or the third- 10 party vendors contracted to provide such services for Green Dot: 11 Fraudulent and other illegal activity involving our products and 12 services could lead to rep utational damage to us and reduce the use 13 and acceptance of our cards and reload network.

14 Criminals are using increasingly sophisticated methods to capture 15 cardholder account information in order to engage in illegal activities 16 such as counterfeiting and identity theft. We rely upon third parties for some transaction processing services, which subjects us to risks 17 related to the vulnerabilities of those third parties. A single 18 significant incident of fraud, or increases in the overall level of fraud, involving our cards and other products and services, could 19 result in reputational damage to us, which could reduce the use and 20 acceptance of our cards and other products and services, cause retail distributors or network acceptance members to cease doing business 21 with us or lead to greater regulation that would increase our 22 compliance costs. 23 A data security breach could expose us to liability and protracted 24 and costly litigation, and could adversely affect our reputation and 25 operating revenues.

26 Our encryption software and the other technologies we use to 27 provide security ... may not be effective to protect against data 28 security breaches by third parties. The risk of unauthorized circumvention of our security measures has been heightened by

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1 advances in computer capabilities and the increasing sophistication of hackers. The banks that issue our cards and our retail distributors, 2 network acceptance members and third-party processors also may 3 experience similar security breaches involving the receipt, transmission and storage of our confidential customer and other 4 information. Improper access to our or these third parties' systems or 5 databases could result in the theft, publication, deletion or modification of confidential customer and other information. 6 7 A data security breach of the systems on which sensitive cardholder 8 data and account information are stored could lead to fraudulent activity involving our products and services, reputational damage 9 and claims or regulatory actions against us. If we are sued in 10 connection with any data security breach, we could be involved in protracted and costly litigation. If unsuccessful in defending that 11 litigation, we might be forced to pay damages and/or change our 12 business practices or pricing structure, any of which could have a 13 material adverse effect on our operating revenues and profitability. We would also likely have to pay (or indemnify the banks that issue 14 our cards for) fines, penalties and/or other assessments imposed by 15 Visa or MasterCard as a result of any data security breach. Further, a significant data security breach could lead to additional regulation, 16 which could impose new and costly compliance obligations. In 17 addition, a data security breach at one of the banks that issue our cards or at our retail distributors, network acceptance members or 18 third-party processors could result in significant reputational harm to 19 us and cause the use and acceptance of our cards to decline, either of 20 which could have a significant adverse impact on our operating revenues and future growth prospects. 21 63. As set forth in paragraphs 60-62, Green Dot's warnings concerning 22 future action by the Treasury Department, new regulation by the Consumer 23 Financial Protection Bureau, the application of laws applied to banks and bank 24 holding companies, additional regulation enacted by Congress and/or state 25 governments, and the impact of successful private litigation against Green Dot, 26 all relate to the consequences of fraudulent use of its cards by identity thieves 27 and imposters. 28

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1 64. Defendants failed to warn investors, however, that revenues could 2 I significantly decline if and when new and heightened security measures, above 3 and beyond the numerous precautions set forth in paragraph 58(a)-(g), 4 uncovered that Green Dot cards and MoneyPaks that are legally purchased 5 and/or registered are either used by the purchaser in conjunction with illegal

6 activities or used by innocent victims of a scam. 5 7 65. The omission of such a risk warning was materially misleading. 8 By the time of the IPO, legally purchased and/or registered Green Dot cards and 9 MoneyPaks were susceptible to being used in conjunction with criminal 10 activity. 11 66. In April 2009, the Justice Department indicted members of a gang, 12 the Black Guerilla Family ("BGF"), in conjunction with criminal activities 13 taking place inside the Maryland state prison system. A statement issued by the 14 Justice Department explained that, inter a/ia, "members used violence and 15 threats of violence to coerce prisoners to pay protection money to BGF. 16 According to the search warrant affidavit, BGF members would supply the 17 extorted inmate with a credit card number of a prepaid credit card, sometimes 18 Green Dot's website contains a section devoted to warning customers about 19 various schemes to steal innocent victims' money using payments by Green Dot 20 cards. One such scam, which was first detected by AVG computer security in 21 June 2011, lures victims to a site that infects computers with malware. The victim's computer screen is locked, purportedly by the FBI, and victims are told 22 that it can only be unfrozen by the payment of a "fine" to the FBI via a Green 23 Dot card. Victims remit either $100 or $200 to the criminal, but their computer screens are never unfrozen. Although the scheme existed for 18 months, and 24 YouTube videos viewed more than 100,000 times gave step-by-step instructions 25 for ridding one's computer of the malware, Green Dot neglected to add the FBI scam to the list of "Most Common Scams" on its website until after the scam 26 made the front page of the Technology section of The New York Times on 27 December 5, 2012. Although the update will sharply curtail the success of the 28 scam, Green Dot's revenues, which for at least the past 18 months included fees generated by the scam, will decline as a result.

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1 referred to as a 'Green Dot' card, and would direct the inmate to have family 2 members or friends place money onto the card when periodically directed to do 3 so by BGF." 4 67. Following the issuance of the BGF indictments, Green Dot became 5 aware of the problem and, according to its Chief Compliance Officer (at the 6 time of the IPO), Lee Jeffrey Ross, was cooperating with law enforcement 7 officials. However, in July 2010, Ross conceded that Green Dot cards could 8 still be used below the radar: Although Green Dot requires identification, 9 including a social security number, to activate and register a card, Green Dot 10 cards can be used without being personalized, much the same way as a gift card. 11 (During the July 26, 2012, conference call, defendants claimed that the amount 12 of revenue generated by initial-load use was not significant.) 13 68. Although defendants were cognizant of the fact that legally 14 purchased and/or registered Green Dot cards and MoneyPaks could be used for 15 nefarious purposes, thereby generating a revenue stream that could vanish due 16 to enhanced security measures, they neglected to issue a risk warning 17 affirmatively so stating. The only risk warning of any kind relating to revenue 18 reduction arising from malfeasance (other than the identity-theft and 19 counterfeiting warnings referenced above), related not to the illegal activities of 20 Green Dot's own customers, but rather, to negative publicity concerning other 21 prepaid card sellers, which could cause potential customers to shy away from 22 making GPR card purchases, in general: 23 Consumers might not use prepaid financial services for any number 24 of reasons, including the general perception of our industry. For 25 example, negative publicity surrounding other prepaid financial service providers could impact our business and prospects for growth 26 to the extent it adversely impacts the perception of prepaid financial 27 services among consumers. 28

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1 69. GPR cards are issued by banks, not by Green Dot itself. 2 Consequently, Green Dot's business did not depend solely upon attracting and 3 maintaining card distribution partners. Green Dot also needed to enter into 4 contracts with issuing banks to hold and administer the funds representing the 5 value customers placed on Green Dot cards. For example, the issuing bank for 6 Green Dot's Walmart MoneyCard is GE Capital Retail Bank. 7 70. As explained in the Registration Statement, at p. 4, to become 8 vertically-integrated and, inter alia, be able to eliminate having to pay a portion 9 of Green Dot's revenues to an issuing bank, Green Dot was in the process of 10 acquiring Bonneville Bancorp, a bank holding company in Utah, and its 11 subsidiary commercial bank, Bonneville Bank. 12 71. Following the closing of the Bonneville Bank purchase in 13 December 2011, Green Dot was required to comply with various banking 14 regulations. Green Dot instituted more stringent risk control and customer 15 screening procedures, in Q1'12 and Q2'12, greater not just of new activations, 16 but of card-user transactions as well. The heightened scrutiny led to the 17 rejection of a significant amount of transactions, thereby depriving Green Dot 18 of activation, reloading and other fees. 19 72. Because there was little discussion of the impact of the new risk 20 control measures in the Q1'12 conference call, analysts were shocked when, 21 one quarter later, defendants attributed half of the guidance reduction for 2012 22 to the new security measures. As reported by iMP Securities on July 27, 2012, 23 in a follow-up discussion after the Q2'12 conference call, defendants disclosed 24 that activation rejections rose 200 basis points in Q2'12, bringing the 25 percentage of rejections into the "double digits," and that "there have also been 26 rising rejections of reloads and more suspicious activity being flagged." 27 28

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1 (Following Q3'12, Keatley confirmed that Green Dot's new card activation 2 rejection rate had increased to over 10% .)6 3 73. Defendants issued and disseminated materially misleading 4 statements to the investing public in the IPO Offering Documents, because they 5 neglected to warn investors that heightened security measures adopted in the 6 future may reveal that a portion of Green Dot's then-current revenues were 7 being generated from fees on legally purchased and/or registered cards and 8 MoneyPaks that are used for illegal purposes or in connection with scams - and 9 that such revenues were, by their nature, unsustainable. 10 74. Plaintiffs and the Class acquired their Green Dot securities 11 pursuant and/or traceable to the IPO Offering Documents. In particular, as its 12 attached certification indicates, IBEW Local 38 made several stock purchases 13 prior to Green Dot's secondary public offering, during the 180-day lock up 14 period following the IPO. Plaintiffs and the Class made their purchases without 15 knowledge of the material omissions alleged herein and could not have 16 reasonably discovered these facts on their own. The value of Green Dot 17 securities sold in the IPO has declined substantially subsequent to and due to 18 defendants' violations of Section 11 of the Securities Act. Had plaintiffs known 19 the material adverse information not disclosed by defendants, they would not 20 have purchased Green Dot securities, or would not have purchased them at 21 artificially-inflated prices. 22 23 6 During the earnings conference call for Q3'10, defendants indicated that 24 security measures enacted prior to the IPO had greatly reduced the amount of 25 fraudulent card use. When asked about the then-current rate of activation 26 rejections, defendants indicated that it was between 5% and 10% because Green Dot had adopted extremely conservative protocols. Because the initial activation 27 rejection rate did not increase significantly between Q3'10 and Q2'12, it 28 appears that much of the anticipated revenue drop off was expected to come from Green Dot declining suspicious sales made on already-activated cards.

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1 75. Plaintiffs and the Class sustained damages when Green Dot's stock 2 price declined after the truth concealed by the material omissions in the IPO 3 Offering Documents emerged, and investors understood that Green Dot's 4 revenue stream was diminished once heightened security measures put in place 5 in 2012 prevented both improper card activation as well as illicit transactions 6 and reloading from taking place. 7 76. Less than one year elapsed from the time that Plaintiffs discovered 8 or reasonably could have discovered the facts upon which this Complaint is 9 based to the time that the first Complaint was filed asserting claims arising out 10 of the falsity of the Registration Statement. Less than three years elapsed from 11 the time that the shares upon which this Count is brought were bonafide offered 12 to the public, in Green Dot's IPO, to the time that the first Complaint was filed 13 asserting claims arising out of the falsity of the Registration Statement. 14 COUNT II 15 16 Violation of Section 15 of the Securities Act (Against Defendants Streit and Keatley) 17 77. Plaintiffs incorporate by reference, as though set forth in full, each 18 and every allegation made in Count I, above. 19 78. This Count is brought against defendants Streit and Keatley by 20 investors who purchased Green Dot shares in or traceable to the IPO pursuant to 21 the IPO Offering Documents. 22 79. Green Dot is liable under Section 11 of the Securities Act as set 23 forth in Count I with respect to the Registration Statement. 24 80. At all times relevant herein Streit and Keatley were controlling 25 persons of Green Dot within the meaning of Section 15 of the Securities Act. 26 Both before and after the IPO, they were executive officers of Green Dot, 27 participated in the day-to-day operations of Green Dot's business affairs, and 28

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1 were responsible for Green Dot's public statements. Streit and Keatley had the 2 power to influence, and did so influence, Green Dot's actions in connection 3 with the IPO as alleged herein. In addition to owning a significant percentage 4 of Green Dot's shares, Streit is the founder, CEO and Chairman of the Board of 5 Green Dot. Keatley was the CFO of Green Dot, and held that position for 6 nearly four years prior to the IPO. 7 81. This Count does not sound in fraud and is not based on any 8 knowing or reckless misconduct by any of the defendants named in this Count. 9 Any allegations of fraud, to wit, materially false and/or misleading statements 10 made with knowledge, deliberate recklessness, and/or without any reasonable 11 basis therefor, as set forth elsewhere herein, are specifically excluded from this 12 Count, as they are not elements of a Section 15 claim. 13 COUNT III 14 15 Violation of Section 10(b) of the Exchange Act And Rule 10b-5 Promulgated Thereunder 16 (Against All Defendants) 17 82. Plaintiffs bring this claim on behalf of themselves and other 18 members of the Class who purchased Green Dot shares during the Exchange 19 Act Class Period, January 26, 2012, through July 26, 2012, inclusive. Plaintiffs 20 incorporate by reference, as if set forth in full, the allegations contained in 21 paragraphs 2-81, above. 22 83. As a result of materially false and/or misleading statements and/or 23 omissions made by defendants, either knowingly, with deliberate recklessness, 24 and/or without any reasonable basis therefor, Plaintiffs and the Class purchased 25 Green Dot's shares at artificially inflated prices. In particular, on January 26, 26 2012, and on April 26, 2012, defendants provided and substantially affirmed 27 guidance for fiscal 2012. In so doing, defendants made statements about the 28 competitive landscape for Green Dot's cards and services which were either

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1 untrue or were materially misleading at a time that defendants - but not 2 investors - were aware that Green Dot's exclusive arrangements with two large 3 distributors were about to disappear and that its largest distributor, Walmart, 4 was about to begin selling competing GPRs marketed by American Express. 5 84. The lack of any reasonable basis for defendants making and 6 substantially affirming 2012 guidance also stems from the implementation of 7 substantial new risk control measures in QV 12 and 12. Defendants 8 instituted new, heightened security measures following: (1) the acquisition of 9 Bonneville Bank and (2) the news that a massive fraud was perpetrated against 10 the IRS by criminals who illegally obtained tax refunds on Green Dot cards 11 using Intuit's Turbo Tax filing program, by falsely filing under the name and 12 social security number of a deceased individual or by stealing the identity of a 13 current taxpayer. In light of the brand new measures, which tracked both initial 14 activations and subsequent suspicious transactions on Green Dot cards, 15 defendants had no reasonable basis to have made and affirmed guidance 16 indicating significant growth in total operating revenues, earnings and several 17 other financial metrics. 18 85. Green Dot's share price declined significantly in response to 19 defendants' unexpected announcement on July 26, 2012, that the Company was 20 slashing FY'12 guidance in half, in part due to the expectation of severe 21 competition in all but one of Green Dot's top five distributors, thereby causing 22 damages to Plaintiffs and the Class. In particular, the market first learned, 23 among other things, that: (1) Green Dot could lose exclusivity at two of its top 24 five retailers upon contract renewal in mid-to-late 2012; (2) Green Dot's FY'12 25 projections failed to incorporate the potential impact of increased competition 26 due to the introduction of competing products or possible loss of exclusivity at 27 four of the Company's top five retailers; (3) Green Dot lacked the ability to 28 precisely forecast the potential impact of increased competition; and (4) in the

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1 limited cases in which Green Dot did lose exclusivity at a retailer, same-store 2 sales growth suffered. Additionally, the market first learned that the new 3 security measures, the implementation of which took place in Q1'12 and 12, 4 were already causing such an impact on new activations and subsequent card 5 transactions that they were the cause of one half of the guidance reduction. 6 Green Dot's Retail Distribution Channel 7 86. Throughout Green Dot's existence as a public company, defendants 8 continually touted the Company's long-term, extensive retail distribution 9 channel as a crucial asset that gives the Company a major advantage over other 10 GPR sellers. For example, during the Goldman Sachs Financial Technology 11 Conference on September 13, 2011, an analyst asked what differentiated Green 12 Dot from the "entrants of new players." Among other things, Streit pointed to 13 "positioning," stating: "[l]t's hard to beat 55,000 retailers, where 95 small 14 percent of every American will go at least once in the course of the week. It's 15 hard to beat that kind of distribution, it's hard to beat the racks and 10 years of a 16 brand name and millions of cards in the market and a platform that will acquire 17 seven or eight million new customers in the course of this year." 18 87. As stated in Green Dot's prospectus for its IPO, the Company's top 19 four retail distributors, for the three months ended March 31, 2010, were: 20 (1) Walmart, accounting for approximately 63% of the Company's sales; 21 (2) Walgreens (8%); (3) CVS (7%); and (4) Rite-Aid (5%). 7-Eleven was 22 Green Dot's largest convenience store distributor and its fifth largest retailer 23 overall. Thus, the Company's top five distributors contributed to over 80% of 24 its total revenues. 25 88. Due to the Company's high concentration of revenues in Walmart, 26 Green Dot's relationship with the retail giant was of paramount importance. 27 Three years before the IPO, the two companies partnered to offer a Walmart- 28

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1 branded card, known as the "MoneyCard," which until the second half of 2011 2 was the only GPR product sold in Walmart stores. 3 89. From Green Dot's IPO in July 2010 through January 2012, 4 Defendants highlighted the following three characteristics of the Company's 5 retail distribution channel: (1) the exclusivity of its retail relationships; (2) the ra importance of same-store sales growth; and (3) the resilience of its retail sales in I the face of new competitive entrants. 8 Defendants Touted Green Dot's Exclusive Relationships 9 90. Green Dot pioneered the sale of GPR cards at retail stores, with its 10 I first sales at Rite Aid in 2001 and at CVS in 2002. As the first-comer, Green 11 Dot's primary defense against competitors was its extensive, and mainly 12 exclusive, retail distribution channel. During the ICR XChange Conference on 13 January 12, 2012, Green Dot's director of Investor Relations, Christopher 14 Mammone, stated: "[W]e have created a deep moat around our business, many 15 barriers to entry. First, our distribution is second to none. It reaches 94% of 16 Americans on a regular basis. I mentioned many times 58,000 retail locations, 17 governed by exclusive contracts in many cases. And that means that no other 18 reloadable prepaid cards can be sold at those outlets." 19 91. As stated in an analyst report issued by SunTrust Robinson 20 Humphrey after the end of the Exchange Act Class Period: "GreenDot's 21 impressive historical revenue growth has been predicated on exclusive 22 distribution agreements with leading retailers. This has been a critical 23 differentiating factor." 24 92. In particular, defendants emphasized Green Dot's "exclusive" retail 25 distribution relationship with Walmart, which investors construed to mean that 26 the MoneyCard was the only GPR product that could be sold in Walmart stores. 27 For example, during the Q3'1 1 earnings call, on October 27, 2011, Streit stated: 28 "[O]n a percentage of volume, . . . everyone [knows] that Walmart's exclusive,

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1 so - and that's 60 some-odd percent [of sales]. So the answer is, most of our 2 volume is exclusive, I guess, by definition there." Again, during the ICR 3 XChange Conference on January 12, 2012, Mammone stated: "Now, the 4 cornerstone of our distribution is Walmart. That's our largest retail partner by 5 far. It accounts for greater than 60% of our revenues. We have been the 6 exclusive GPR, which stands for general purpose reloadable cards, inside Wal- 7 Mart since 2006.... The current five-year exclusive deal runs through May of 8 12015." 9 93. Even in cases where Green Dot's retail relationship was not 10 contractually exclusive, it was often de facto exclusive because the retailer 11 elected not to sell any competing GPR products. During the Q3' 11 earnings 12 call, Streit stated: "I think what's probably most important to note is that not all 13 of our retailers are exclusive, no[r] have they ever all been exclusive. And yet, 14 even in the ones where we're not contractually exclusive, it's common and 15 typical that they would still sell only our products, anyhow." 16 94. Investors relied on defendants' descriptions of Green Dot's 17 distribution relationships because, due to purported competitive reasons, 18 defendants provided very little visibility into the scope and duration of Green 19 Dot's contracts with distributors or the exclusivity arrangements, if any, 20 contained therein. With the partial exception of the Walmart agreement, parts 21 of which were made available to investors in highly-redacted form, the market 22 had no idea when distribution agreements with specific retail distributors were 23 up for renewal or renegotiation. 24 95. The refusal to provide details coupled with the statement that 25 contract renewals were spread out on a rolling basis - so as to suggest that a 26 loss of or changes to any given contract would not cause a major disruption - 27 was reiterated on several occasions. During the Q4'10 earnings call, on 28 February 10, 2011, Streit refused to answer whether there were any contract

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1 renewals coming up in 2011: "I don't think we've ever disclosed contract ends. 2 Most of our contracts are enrolling [sic] kinds of agreements. We are always in 3 a renewal discussions with somebody at somewhere generally." During the 4 Q3'1 1 earnings call, Streit again stated: "We've never really gotten into 5 specific[s] as to which retailers were exclusive and which ones were not." 6 Defendants did discuss the specifics of retail distribution contracts, however, 7 when it was beneficial to them, such as when defendants disclosed the renewal 8 of the Kmart and Rite Aid contracts during the Q4'1l earnings call. 9 Defendants Stated That Revenue Gains 10 Would Come From Same-Store Sales Growth 11 96. Green Dot already had contracts with the nation's largest retail 12 chains by the time of the IPO. For this reason, defendants repeatedly told 13 investors that the Company's future growth depended primarily on increasing 14 same-store sales in its retail channel and creating viable new sales channels, 15 rather than increasing the size of its retail footprint. During Green Dot's very 16 first earnings call after the IPO, the Q2'10 call on August 12, 2010, Streit 17 stated: "And so we're fairly fully penetrated at this point, so there will be some 18 add ons.... But I think the mass of our growth if you will won't be from new 19 retailers, although we'll have them. It will be more from same store growth of 20 I those retailers, new products and services, and some of the other growth 21 I initiatives that we talked about." 22 97. This point was reiterated during the Q1'll earnings call, on April 23 28, 2011, with Streit listing the array of top retailers Green Dot already 24 partnered with: "Green Dot pretty much has every beautiful plum on the tree I 25 think already picked. . . . [W]hen you have Walmart and Walgreens and Rite 26 Aid and CVS and Kmart and 7-Eleven and Circle K and Radio Shack - I can't 27 I think them all - Kroger, there is a not 100 more like them, right? . . . But I 28

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1 think it's fair to say that we continue to expect same-store growth, we have and 2 I we'll continue to see it." 3 98. Again, just before the start of the Exchange Act Class Period, 4 during the ICR XChange Conference on January 12, 2012, Mammone affirmed: 5 "[W]e're very well represented in the discount, convenience, grocery, and 6 pharmacy channels nationwide. . . . And perhaps we are more focused on the 7 non-retail distribution today because we've established within retail such a large 8 footprint, in that it's already such a key differentiator." 9 99. Because sustaining strong revenue growth required increasing 10 same-store sales, maintaining exclusivity at Green Dot's retail distributors was 11 critical to the Company's success. Just prior to the Exchange Act Class Period, 12 defendants gave investors reason to believe this would occur. Mammone stated 13 during the ICR XChange Conference that Green Dot's exclusive distribution 14 arrangements provided the Company with "a stable and predictable model with 15 good revenue visibility, due to the transaction-oriented nature of [its] sales 16 model and also the long-term contract that we have with our retail partners." 17 Defendants Repeatedly Denied That Competition Posed a Problem 18 100. From the time Green Dot went public, defendants consistently 19 claimed that there was room for additional entrants - which would expand the 20 overall market, by making GPR products more visible to potential customers - 21 without a diminution of Green Dot's sales. As Streit explained during the 22 Q2'10 earnings call on August 12, 2010: "[A] rising tide does in fact float all 23 boats in a developing market. This isn't a product where you have a 100% 24 awareness of the product. . . . So for other banks or other financial institutions 25 to market this more heavily or to have promotions or to go on TV with it, or to 26 be on financial talk shows, talking about the product, can only help the market 27 develop. And given our size, distribution and scale, I think will be an outsized 28

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1 beneficiary of that kind of publicity. So I don't really worry about it, because 2 the awareness of the products today is so small, relative to other products." 3 101. Keatley reiterated this point during the Q3'1 1 earnings call on 4 October 27, 2011: "[I]f anything, [increasing competition] makes the category

5 1 more urgent to consumers when we have more companies out there marketing 6 and propelling the benefits of the product. And we think that's a good thing. 7 And that's the way products in large industries develop." Keatley also referred 8 to Green Dot's experience with competitor Western Union: "[D]uring our IPO 9 roadshow, the big crisis at that time was that Western Union a few months 10 before [the] IPO . . . came out with the low fee or fee-free card. . . . And 11 everybody had opined at the time, oh my gosh, this is it. And Western Union 12 said, we'll be in everybody's retailer. And of course, that has never 13 materialized." 14 102. Before the second half of 2011, defendants' blasé position 15 concerning the impact of new entrants could have been justified. Until then, 16 Green Dot had yet to face strong competitive pressure in the retail space, largely 17 because of the Company's exclusive relationships (both contractual and de 18 facto) with retail distributors, Walmart in particular. Perhaps the first big 19 change in Green Dot's competitive landscape was the June 2011 resignation of 20 Jane Thompson, who had been the executive in charge of the financial services 21 arm of Walmart for nine years. When the American Banker named Thompson 22 its innovator of the year for 2011 - for bringing a variety of alternative financial 23 services options to Walmart for the unbanked and underbanked - Streit, who 24 took Green Dot public largely on the basis of its blockbuster deal with Walmart, 25 did not limit his praise to Thompson's impact on Green Dot: "Today it's taken 26 for granted that there's a prepaid industry, but without Jane's belief it's less 27 certain." With Thompson gone, Green Dot lost the biggest booster in the 28 industry.

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1 103. Although investors were assured that Green Dot's key contracts 2 came up for renewal on a rolling basis, defendants largely refused to disclose 3 the scope and duration of Green Dot's exclusive relationships with retailers. 4 Thus, investors had insufficient information, other than defendants' 5 representations, to determine whether Green Dot's market dominance was 6 sustainable in the face of stiff competition from entrants that had very strong 7 brand names and were aggressively pursuing retail distribution deals with 8 lucrative partnership offers. For the same reason, investors did not know 9 whether head-to-head competition at Green Dot's top retail distributors would 10 cause sales to increase - as defendants said it would, as new entrants brought 11 more publicity and legitimacy to the GPR cards as alternative financial service 12 providers - to grow at a lesser rate, or to decline. 13 Retail Competition Began to Intensify by Mid-2011 14 104. By the second half of 2011, competition was escalating as Green 15 Dot's competitors were striking distribution deals with major retailers, including 16 one of Green Dot's top five retail distributors, 7-Eleven. Competitors' 17 announcements near the end of 2011, particularly from rival NetSpend 18 Corporation ("NetSpend") and American Express foreshadowed a more difficult 19 environment for achieving same-store sales growth in 2012: 20 a. September 20, 2011: NetSpend announced a retail 21 distribution agreement with Blackhawk Network ("Blackhawk"), which 22 sold GPRs, among other products, through its network of leading grocery, 23 mass, drug, convenience and specialty retailers, including Safeway. 24 (Almost one month later, on October 11, 2011, Green Dot announced a 25 similar agreement with Blackhawk); 26 b. October 14, 2011: NetSpend announced an agreement with 27 7-Eleven to allow NetSpend cards to be reloaded at 6,000 stores. Since 28

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1 2009, 7 Eleven had been one of Green Dot's major retail distributors, 2 although not contractually exclusive. 3 C. October 14, 2011: Western Union announced an agreement 4 with 7-Eleven. 5 d. November 15, 2011: American Express announced that its 6 prepaid cards would be sold at approximately 1,000 Target stores. 7 8 105. Discussing NetSpend's string of successes in 2011, an American 9 Banker article published on October 14, 2011 stated: "NetSpend has been 10 looking to grow its distribution channels beyond places like cash checking 11 locations and non standard automobile insurers. The 7-Eleven deal comes less 12 than a month after NetSpend announced a deal with Blackhawk Network to sell 13 NetSpend Visa prepaid cards at more than 3,000 retail locations starting in 14 November." The article also noted that NetSpend was expanding its GPR retail 15 network after it lost three check cashing businesses as distributors in the second 16 quarter. 17 106. Thus, in response to setbacks in the check-cashing business,

18 NetSpend changed its business strategy and decided to aggressively pursue 19 distribution relationships with major retailers. Unless contractual exclusivity 20 continued at other major retail distributors, NetSpend's string of retail deals 21 posed a threat to Green Dot's market dominance and same-store sales 22 I expansion. 23 107. Also in the second half of 2011, a different and potentially more 24 serious threat emerged: American Express, a competitor with vastly greater

25 resources and a much stronger brand name than Green Dot's, launched its

26 competing product, "Bluebird." Worse for Green Dot, American Express 27 sought to establish itself at Walmart - Green Dot's most highly coveted retail 28 distributor and partner. Although only rolled out on a test basis in certain

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1 Walmart locations on the West Coast at or around Thanksgiving, American 2 Express's high brand-name recognition and card-holder "perks" made the new 3 Bluebird a very formidable competitive product. Thus, at the end of 2011, 4 hOwever, there was little, if any, general market awareness of the Bluebird 5 launch at Walmart. Green Dot's investors were, therefore, not aware of the fact 6 that Green Dot's purportedly-exclusive retail distribution agreement with 7 Walmart permitted the sale of such a competing product. 8 108. News about intensifying competition became a source of concern 9 to analysts covering Green Dot. During the Company's Q3'1l earnings call on 10 October 27, 2011, in light of Green Dot's strategy of growing revenues through 11 increased same-store sales, one analyst asked about increasing competition in 12 the retail channel: "[I]t does seem like we're going to increasingly see the your 13 card sold by side-by-side with others. Is that going to change your strategy?" 14 Streit's answer downplayed the need for serious concern: "Yes, we think about 15 it a lot. We don't know if they will be sold in a lot of places side-by-side but 16 certainly, more than we were, let's say, last year. Because last year, the answer 17 was maybe one retailer and this year it can be two. So there could be others." 18 Keatley was even more assuring, stating: "[W]e don't see any new product or 19 new distribution agreement on the horizon that will do anything to impede our 20 growth." (Emphasis added.) 21 109. A day before defendants issued Green Dot's fiscal 2012 guidance 22 on January 26, 2012, however, one such deal had surfaced. As a follow-on to 23 their reloading deal three months earlier, 7-Eleven and NetSpend announced, on 24 January 25, 2012, that they had entered into a card distribution deal. 25 110. Also by January 26, 2012, defendants were aware that Bluebird, 26 could potentially impede Green Dot's same-store growth at Walmart. As 27 Keatley subsequently acknowledged in March 2012: "[T]here are areas of 28 overlap where [MoneyCard and Bluebird] clearly will compete," and that

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1 "AmEx is making a strong push to increase distribution of their card." In 2 addition, emerging competitors NetSpend and PayPal also offered several GPR 3 products that had lower so-called "headline prices" - i.e., monthly fee and the 4 cost of loading the cards. 5 111. Moreover, defendants knew about the expiration of two of Green 6 Dot's own distribution agreements that could potentially impede the Company's 7 growth in the near future. Green Dot's retail distribution agreements with 8 Waigreens and CVS were each up for renewal in 2012, a fact that was not 9 disclosed to investors until the end of the Exchange Act Class Period. In other 10 words, Green Dot's second- and third-most important retailers, accounting for at 11 least 15% of the Company's revenues, had the option of ending contractual 12 exclusivity in 2012. With the emergence of strong, competitive entrants into 13 the retail space - e.g., American Express and NetSpend - the loss of exclusivity 14 was now more likely than ever. At the same time, given the stated importance 15 of same-store sales growth, maintaining exclusivity was now more important 16 than ever. 17 112. Defendants faced a "Catch 22": To maintain its exclusivity at 18 retailers, Green Dot would be forced, as it was with Walmart, to pay a higher 19 commission, thereby detracting from revenue growth. However, if Green Dot 20 products were no longer sold exclusively, while the Company would pay lower 21 commissions, it would have to confront head-to-head competition. 22 113. Any reasonable guidance regarding Green Dot's outlook for FY'12 23 would have had to disclose and take into account the potential impact of the 24 new Bluebird product and the upcoming renewal of the Walgreens and CVS 25 distribution agreements, developments that could result in a loss of retail 26 exclusivity and create an impediment to the Company's revenue growth. As 27 alleged below, defendants failed to do this. 28

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1 Defendants Knew That Green Dot Would Have to Implement More Stringent Risk Controls, Creating a Drag on Growth 2 3 114. As previously alleged, two events led to the adoption of long 4 overdue enhanced risk controls and screening measures: the closing of the 5 Bonneville Bank acquisition in December 2011 and the Company's recent 6 embarrassing experience with the massive tax refund fraud schemes. Regarding 7 the latter, after the end of the Exchange Act Class Period, during the Q3'12 8 earnings call on November 1, 2012, Streit tellingly revealed that despite its 9 representations of state-of-the-art systems and processes which evolved to keep 10 up with changing requirements, see, e.g., paragraphs 58(a)-(g) and 59, Green 11 Dot was ill-equipped to foil the scheme: "[Green Dot] did the TurboTax 12 program, which we thought at the time was a blessing. I'll tell you what it was, 13 though, for sure and that was a crash course education in all the crazy things 14 that happened with tax fraud and with ID theft and everything else." 15 115. Asset forth in paragraphs 60-63, above, at the time of the IPO, the 16 Company's risk warnings pertaining to fraud had focused on potential security 17 breaches and identity theft and stated that fraud "could result in reputational 18 damage to us, which could reduce the use and acceptance of our cards and other 19 products and services, cause retail distributors or network acceptance members 20 to cease doing business with us or lead to greater regulation that would increase 21 our compliance costs." 22 116. In its Form 10-K for FY'11, filed on February 29, 2012, however, 23 in conjunction with the implementation of its heightened risk controls in Q1'12 24 and Q2'12, Green Dot modified its risk disclosures, to add the following 25 warning: "[TIn an effort to counteract fraud involving our products and services, 26 we may implement risk control mechanisms that could make it more difficult 27 for legitimate customers to obtain and use our products and services, which 28 would negatively impact our operating results."

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1 117. Because the prior warnings all related to identity theft and security 2 breaches, investors likely understood this warning to refer to the unintended 3 impact, on future legitimate business, of tighter controls to prevent such harms. 4 Again, the warning did not go so far as to affirmatively state that, to date, Green 5 Dot's revenue stream already includes fees from illicit activities performed with 6 legally purchased and/or registered cards and from payments made to con 7 artists, via purchases of MoneyPaks, by victims of scams - the curtailment of 8 which by heightened screening will also negatively impact our operating results. 9 118. However, defendants had become aware of this fact in 2009 when 10 informed about the illicit use of Green Dot cards by a Maryland prison gang. 11 After the end of the Exchange Act Class Period, during the Goldman Sachs 12 Financial Technology Conference on September 13, 2012, Streit implicitly 13 admitted as much: "[W]hen we did . . . the [TurboTax] program originally a 14 couple of years back, we became aware of just some of the things that can 15 happen. [T]here was just a lot of fraud associated with tax cards and 16 government cards and that sort of woke us up to a whole different channel that 17 we hadn't really been focused on prior to that." (Emphasis added.) 18 119. Once cognizant of the "whole different [revenue] channel," 19 defendants knew that tighter risk controls over transactions by existing card 20 users, on legally registered GPR cards, would lead to a drop in revenue.' As 21 Green Dot was implementing these additional controls during Q1'12 and 22 Q2'12, greater scrutiny of not just new activations, but of existing card-user 23 transactions, resulted in the rejection of a significant amount of transactions - 24 thereby depriving Green Dot of activation, reloading and other fees.

25 During the September 13 Goldman Sachs conference, Streit explained: "[W]e 26 do ongoing oversight of our existing customers as well as controls on the new 27 customers coming in. So we'll periodically rerun them through various screens 28 and then we'll monitor the behavior that we see on the cards that have been activated."

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1 120. Any reasonable guidance for FY'12 would have had to disclose and 2 take into account the expected impact of stricter risk controls - not just as a 3 headwind to future growth but as a drain on existing revenues - in addition to 4 the potential impact of increased competition as the exclusive Waigreens and 5 CVS contracts were up for renewal and Bluebird took flight at Walmart. As 6 alleged below, defendants failed to do this. 7 8 Defendants' Materially False and Misleading Statements Regarding Green Dot's Initial 2012 Guidance 9 10 121. Ahead of Green Dot's announcement of fourth quarter 2011 results, 11 analysts were concerned about new competition. For example, in an analyst 12 report issued on January 24, 2012, J.P. Morgan stated that one of Green Dot's 13 "headwinds" heading into 2012 was "uncertainty surrounding . . . new 14 competition." The report noted that "a few interesting deals were announced 15 away from Green Dot" and advised investors to "expect banks to slowly get 16 I bigger in the space." 17 122. In a press release issued on January 26, 2012, Green Dot 18 announced its Q4'1l results and guidance for FY'12 "anticipated results." 19 According to the press release, Green Dot expected non-GAAP total operating 20 revenues to grow 20-24% based on the following year-over-year assumptions: 21 greater than 20% growth in the average number of active cards, greater than 22 20% growth in cash transfers, and greater than 30% growth in gross dollar 23 volume ("GDV"). (GDV includes cash coming from card activations, card 24 reloads, and cash transfers.) The Company also expected earnings before 25 interest, taxes, depreciation, and amortization ("EBITDA") growth of 20-24%. 26 Defendants stated that the forecast was "based on a number of assumptions that 27 Green Dot believes are reasonable at the time of this earnings release." 28

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1 123. On the same day that Green Dot issued its Q4'1l earnings 2 announcement, Streit and Keatley participated in a conference call with 3 analysts. During the call, Keatley reiterated the FY'12 guidance, including that 4 "non GAAP total operating revenues are expected to grow 20% to 24%."

5 Discussing revenue growth later in the call, Keatley added: "We don't need any 6 additional partnership deals or new products to hit the low end of the range," 7 implying that guidance relied exclusively on same-store sales growth. 8 124. During the call, Keatley represented that: "All of our current deal 9 terms are reflected in our outlook for next year [2012]." Similarly, when an 10 analyst asked whether Green Dot "expect[ed] any other contract renewals in 11 2012 to impact guidance," Streit answered: "I wouldn't think so. . . . We sell a 12 tremendous amount of product to our retailers and the relationships are fairly 13 well established, so there could be some minor changes left to right, but the 14 renewals we've had over the years have been fairly consistent and so don't see 15 anything radical happening." (Emphases added.) 16 125. Defendants' statements on January 26, 2012, quoted in paragraphs 17 122-124, above, were materially misleading when made because defendants had 18 no reasonable basis for their FY 2012 forecast for the following reasons: 19 a. Defendants knew, but did not disclose, facts indicating that 20 there was a strong possibility that Green Dot would lose exclusivity at its 21 top three retailers (accounting for up to 78% of the Company's revenues) 22 - at Walmart due to the limited scope of its actual exclusivity, as 23 demonstrated by the test-trial of Bluebird; and at Waigreens and CVS 24 because both of these key contracts were up for renewal in 2012 and 25 competitors, such as NetSpend, were successfully pressing hard for 26 distribution deals; 27 28

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1 b. Defendants' guidance did not take into account the potential 2 loss of exclusivity and the resulting impact of competitive entrances into 3 Green Dot's retail channel; 4 C. Defendants knew, but did not disclose, that Green Dot lacked 5 the ability to precisely forecast the impact of widespread loss of 6 exclusivity, and that in the limited cases in which Green Dot lost 7 exclusivity (either contractual or de facto) at a retailer, the Company's 8 new card sales took a "significant hit" and active card revenues grew at a 9 "much slower rate." 10 d. Defendants knew, but did not disclose, that their guidance 11 did not take into account the negative impact on revenue growth that 12 would be caused by Green Dot's implementation of tighter risk controls. 13 14 126. Following defendants' materially misleading statements on January 15 269 2012, analysts reported that Green Dot's guidance was conservative and did 16 incorporate the potential impact of competitive entrants into the Company's 17 retail channel. Analysts also noted that Green Dot's guidance had incorporated 18 the impact of future contract renewals in 2012. 19 127. For example, in a report issued on January 27, 2012, Piper Jaffray 20 stated its belief that defendants' guidance was conservative, reflecting that 21 "2012 will be a year of investments and the competitive environment remains 22 challenging." The Piper Jaffray report stated: "We believe there are still 1-2 23 renewals remaining in 2012, and management noted that guidance includes the 24 potential impact of these renewals." (Emphasis added.) Similarly, an analyst 25 report issued by Morgan Keegan on the same day stated that, based on 26 Defendants' misrepresentations, Green Dot's "distribution relationships are 27 solidifying." Indeed, a Sterne Agee analyst report stated that Green Dot "is now 28 taking a more conservative stance on its 2012 earnings power."

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1 128. In an analyst report also issued on January 27, 2012, Janney Capital 2 Markets was skeptical about the Green Dot's ability to increase its margins and 3 meet EBITDA guidance, largely due to competition: "We believe the cost to 4 acquire marginal prepaid customers will continue to increase due to increased 5 competition, price compression, new entrants that introduce products with lower 6 upfront and monthly maintenance fees, and new debit interchange rules that 7 dilute the value proposition of GPR cards becoming replacements for checking 8 I accounts." 9 129. On January 27, 2012, in response, at least in part, to the perceived 10 slow down in growth anticipated by analysts and investors concerned with 11 increasing competition, Green Dot's share price declined from $31.94 to $28.59 12 on heavy trading. 13 Investors Learn of Bluebird's Launch at Walmart 14 130. On February 14, 2012, Deutsche Bank issued an analyst report 15 disclosing that American Express launched the Bluebird test-trial at select 16 Walmart locations in November 2011. Deutsche Bank stated that this news 17 "calls into question GDOT's exclusivity agreement with Wal-Mart." Until this 18 point, defendants' statements regarding its "exclusivity" in Walmart stores gave 19 investors the understanding that Walmart would not offer any products to 20 compete with MoneyCard. Only after news of the Bluebird launch did Green 21 Dot begin to disclose additional information about the scope of its exclusivity 22 agreement. 23 131. Two days later, at the Keefe, Bruyette & Woods Cards, Payments 24 & Financial Technology Symposium on February 16, an analyst's question 25 exemplified investors' confusion regarding Green Dot's exclusivity 26 arrangement with Walmart. The analyst asked: "I just wanted to get a sense of 27 how you guys feel about [the launch of Bluebird at Walmart] competitively, 28 given that two-thirds of your business is through Walmart and that was

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1 supposed to be based on an exclusive relationship through 2015 or whatever it 2 is?" Streit explained why Bluebird was not a violation of Green Dot's 3 exclusivity: (1) "Wal-Mart would tell you that it's not a competitive product. 4 We don't view it as a competitive product. It's a decoupled debit card that's not

5 marketed as a prepaid card or as a competitor to MoneyCard;" (2) "[T]he 6 exclusive contract we have at Wal-Mart is in relation to the MoneyCard 7 I portfolio which continues to be exclusive and will be." 8 132. To demonstrate that their product did not compete with the trial 9 offering at Walmart, defendants focused on the differences between GreenDot's 10 MoneyCard and the Bluebird test-trial. Specifically, defendants pointed out that 11 unlike MoneyCard, Bluebird was not FDIC-insured, there were significant 12 restrictions and fees on ATM withdrawals, and Bluebird could not accept 13 government benefit deposits. Moreover, Streit claimed that Bluebird was not a 14 competing product because it was targeted at a different audience: Bluebird is a 15 "decoupled debit card that a bank customer would use in lieu of their bank debit 16 card," as opposed to a product, such as MoneyCard, that is "suitable for a low 17 income or an un-banked individual." 18 133. Defendants' attempts to differentiate the two cards achieved mixed 19 results with analysts. An analyst report issued by Janney Capital Markets on 20 March 6, 2012, noted that "[i]ncreased competition from American Express 21 through GDOT's largest distributor [was] a major development." Janney also 22 stated that the launch of Bluebird and its $0 monthly maintenance fee, 23 compared to MoneyCard's $3 monthly maintenance fee, was "consistent with 24 [its] overall thesis that new entrants will put downward pressure on pricing." 25 134. Two other analysts, Jefferies and Sterne Agee, also issued reports 26 on March 6, 2012. Both reports discussed the Bluebird test-trial and reiterated 27 some of the differences between the Bluebird card and MoneyCard previously 28

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1 highlighted by defendants. Both analysts indicated that, as a result, Bluebird 2 might not pose as big a threat as first appeared. 3 135. Investors took note of the three reports and, regardless of the 4 differences between the Bluebird test-trial card and Green Dot's, became 5 concerned about aggressive competition from American Express at Walmart - 6 the source of more than 60% of Green Dot's revenues. On March 7, 2012, 7 Green Dot's share price tumbled from $32.11 to $29.73 on heavy trading. 8 136. Investors had reason to be concerned. Keatley soon acknowledged, 9 at the Roth Capital Partners OC Growth Conference on M arch: 12, 2012: 10 "[T]here are areas of overlap where [MoneyCard and Bluebird] clearly will 11 compete," and that "AmEx is making a strong push to increase distribution of 12 I their card." 13 137. Despite the acknowledged "areas of overlap" between MoneyCard 14 and Bluebird at Green Dot's most important retailer, Defendants failed to 15 disclose that their FY'12 guidance did not take into account the potential impact 16 that a full-scale Bluebird launch would have on same-store sales growth at 17 Walmart, rendering defendants' guidance materially and misleading and 18 without reasonable basis. 19 138. Adding to the competitive pressure brought to bear on Green Dot, 20 on March 21, 2012, American Banker reported that American Express entered 21 into a retail distribution agreement to sell its prepaid card at more than 1,100 22 Office Depot locations. 23 24 Defendants' Materially False and Misleading Statements Regarding Green Dot's Updated 2012 Guidance 25 26 139. In a press release issued on April 26, 2012, Green Dot announced 27 its first quarter 2012 results and updated guidance for the Company's 2012 28 "anticipated results." Rather than modifying its initial guidance, for which

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1 defendants had no reasonable basis - because it failed to take into account the 2 potential impact of new competing products and the possible loss of exclusivity 3 in up to 78% of its retail channel - defendants left their guidance unchanged for 4 non-GAAP total operating revenues (20-24%), average number of active cards

5 (20%), cash transfers (20%), and GDV (30%). Defendants modified only their 6 EBITDA and BPS guidance, lowering the former from 20-24% to 8-12% to 7 reflect additional operating expenses anticipated in connection with an 8 acquisition. Again, defendants stated that its FY' 12 guidance was "based on a 9 number of assumptions that Green Dot believes are reasonable at the time of 10 this earnings release." 11 140. On the same day that Green Dot issued its Q1'12 earnings 12 announcement and updated guidance, Streit and Keatley participated in a 13 conference call with analysts. During the call, Keatley discussed Green Dot's 14 ongoing changes in its risk controls in a manner consistent with the new risk 15 warning that appeared in the 2011 Form 10-K two months earlier:

16 [W]e've taken the prudent step of strengthening our customer 17 identification processes on all customers, and tax refund customers in particular. The reason for this increased screening is that we want 18 to be sure that our portfolio is beyond reproach in terms of how we 19 mitigate the risk associated with tax refund fraud, which has been so 20 widely publicized, and the risks associated with operating a bank that attracts the sheer volume of customers that we do in any given year. 21 We are constantly updating our risk policies and controls to ensure a 22 safe, sound and compliant program. But in so doing, we may in fact cause some pressure on the growth of our new card activation and 23 GDV metric. 24

25 Once again, defendants did not discuss the new risk controls' likely reduction of 26 current revenue from illicit activities on legally obtained cards. 27 141. Analysts questioned defendants' decision to maintain their revenue 28 guidance, noting that because GDV growth was only 5% in the first quarter

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1 meeting 30% GDV guidance for FY'12 would require a significant acceleration. 2 Analysts also questioned whether Green Dot could maintain such growth. 3 I Although he recognized that growth would have to accelerate in the remaining 4 three quarters to meet guidance, Keatley stated that Green Dot "appear[ed] to be

5 on track" to do so. Specifically, he expressed confidence that the Company 6 would "hit those benchmarks" because "[t]here are lot of strong drivers in 7 I terms of GDV growth that will continue throughout the year." (Emphasis 8 added.) 9 142. While answering a question about Green Dot's "renewal pipeline," 10 Streit stated: "[W]e do have renewals that are always up at various retailers. 11 I We have one we're working on now and so far, so good. But that's somewhat 12 steady state. So I think that we feel good about the new prospects and 13 continuing our existing prospects." (Emphasis added.) Later in the call, Streit 14 indicated that he had been personally talking to buyers from Green Dot's retail 15 I distributors. 16 143. Analysts were demonstrably concerned about the impact of losing 17 exclusivity at Green Dot's retail distributors, especially Walmart. One analyst 18 asked: "Have you noticed in terms of tracking the same-store sales and the 19 Walmart [Bluebird] pilot locations there, has there been any impact on your 20 volumes, on your sales activity?" Streit answered that Green Dot had "internal 21 information" but refused to disclose it. Instead, he side-stepped the question by 22 offering: "I think the more salient point is that you see our numbers and you[] 23 see our sales. So nothing yet that would cause headwinds to our forecasts and 24 as you say, we're meeting them." (Emphasis added.) 25 144. More generally, analysts wanted to know how Green Dot's 26 products were performing against head-to-head competition following a loss of 27 exclusivity. One analyst asked: "[C]an you talk a little bit about what you're 28 seeing when your cards are being sold side by side with other cards, where

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1 maybe you're used to be the only card being sold in a retailer and now there's 2 maybe two or even three other brands, what are you starting to see?" Streit 3 answered that "we seem okay," but it was "probably too early to know because 4 the only ones [where Green Dot was going head-to-head with competing 5 products were] 7-Eleven and Blackhawk." Claiming that it was too soon to tell 6 because there were "not enough retailers doing it today," Streit gave a time line 7 for when the effects of competition would be better understood: "[O]ver time 8 more will start, and then we'll have more data to look at it a year from now or 9 two years from now." (Emphases added.) 10 145. While Streit yet again made the "rising tide lifts all boats" 11 argument (i.e., competition would only expand the market and consumer 12 awareness of it) and noted that his discussions with some retailers' buyers 13 confirmed this, he also acknowledged that during their internal analyses, 14 defendants considered whether new competition in the retail channel could 15 instead "take[] a proportional bite out of [Green Dot's] total sale[s]." 16 Ultimately, Streit assessed the current situation as "so far, so good" and 17 expressed confidence based on Green Dot's position as the established industry 18 I leader. 19 146. Defendants' statements made in the press release and during the 20 conference call on April 26, 2012, quoted in paragraphs 139-145, above, were 21 materially misleading when made because defendants had no reasonable basis 22 for their FY'12 forecast: 23 a. Defendants knew, but did not disclose, facts indicating that 24 there was a strong possibility that Green Dot would lose exclusivity at its 25 top three retailers (accounting for up to 78% of the Company's revenues) 26 - at Walmart due to the limited scope of its actual exclusivity, as 27 demonstrated by the test-trial of Bluebird; and at Walgreens and CVS 28 because both of these key contracts were up for renewal in 2012 and

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1 competitors, such as NetSpend, were successfully pressing hard for 2 distribution deals; 3 b. Defendants' guidance did not take into account the potential 4 loss of exclusivity and the resulting impact of competitive entrances into 5 Green Dot's retail channel; 6 C. Defendants knew, but did not disclose, that Green Dot lacked 7 the ability to precisely forecast the impact of widespread loss of 8 exclusivity, and that in the limited cases in which Green Dot lost 9 exclusivity (either contractual or de facto) 10 at a retailer, the Company's new card sales took a"significant hit" and active card revenues grew at a 11 "much slower rate." 12 13 d. Defendants knew, but did not disclose, that their guidance 14 did not take into account the negative impact on revenue growth that 15 would be caused by Green Dot's implementation of tighter risk controls. 16 147. In addition, Streit's statements about Green Dot's lacking the 17 ability to accurately forecast the impact of head-to-head competition, due to 18 only having limited experience with rival NetSpend at 7-Eleven and 19 Blackhawk, were materially false when made and made with deliberate 20 recklessness as demonstrated by Streit's subsequent statements on July 26, 21 2012. 22 148. On the latter date, Streit admitted that in the limited cases in which 23 Green Dot lost exclusivity (either contractual or de facto) at a retailer, the 24 Company's new card sales took a "significant hit" and active card revenues 25 grew at a "much slower rate." 26 149. Moreover, the passage of time since the initial guidance on January 27 26, 2012, made defendants' decision to double-down on their FY'12 revenue 28 guidance even more egregious and inexcusable. On April 26, it had become

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1 even more apparent to defendants that their guidance had no reasonable basis 2 considering that: (i) within a few months, both Waigreens and CVS would 3 renew their retail distribution agreements on a nonexclusive basis; (ii) Green 4 Dot's distribution agreements generally required a notice period prior to going 5 nonexclusive (the Walmart agreement included one); (iii) Streit was personally 6 talking to buyers at the Company's distributors; (iv) Green Dot's Q1'12 results 7 for its key growth metrics fell short of the predicted rate for FY'12 - far short 8 with respect to GDV; and (v) defendants acknowledged that new competition 9 resulting from a loss of exclusivity could possibly "take[] a proportional bite out 10 of [Green Dot's] total sale[s]." 11 150. Although defendants disclosed the possibility that changes in Green 12 Dot's risk controls could "cause some pressure on the growth of our new card 13 activation and GDV metric," defendants failed to disclose what they knew at the 14 time - that the changes would also curtail an existing revenue stream. Even 15 when an analyst asked defendants to quantify the impact, Streit and Keatley 16 evaded giving any indication of what that impact would be. As Keatley would 17 later reveal on July 26, 2012, "the combined effect of these various new 18 controls . . . [on] the growth impact to our overall portfolio" would be "on the 19 order of 5 to 10 percentage points." 20 151. On April 27, 2012, the day after Green Dot issued its Q1'12 21 earnings release and Streit and Keatley made their conference call remarks, 22 Janney Capital Markets issued an analyst report explaining the lack of clarity 23 provided by defendants' disclosures: "Bulls will argue the bar has now been re- 24 calibrated, revenue guidance remained unchanged, and the elevated spending is 25 temporary and contained to 2012. As a result, risk/reward is attractive because 26 of re-calibrated expectations. Bears will argue a second consecutive quarter of 27 lowered expectations is problematic, investment spending is not temporary and 28 indicative of a technology arms race, and that revenue guidance of +20% to

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1 +24% appears optimistic." Janney also noted that "competition for prepaid 2 II customers continues to increase." 3 152. Because the public was unaware that defendants' guidance failed to 4 11incorporate (i) the potential impact of new competition at Green Dot's most 5 important retailer, and (ii) the potential impact of losing exclusivity at 6 Waigreens and CVS that year (a significant possibility given American 7 Express's and NetSpend's recent inroads), analysts and investors differed on 8 whether the "bull case" or the "bear case" was correct. Not surprisingly, Green 9 Dot's stock price did not react much, going from $25.79 on April 25, 2012, to 10 $26.42 on April 26, 2012, and to $26.29 on April 27, 2012. 11 153. During the J.P. Morgan TMT Conference on May 17, 2012, just as 12 he did during the April 26, 2012, conference call, Streit suggested that head-to- 13 head competition was not imminent: "So the question is will CVS or Waigreens 14 become nonexclusive? Will at some years out Wal-Mart stock other products? 15 Will somebody else do something?... So the answer is we don't know." 16 154. Streit's statement was materially misleading when made because it 17 failed to disclose that Green Dot's contracts with Waigreens and CVS were up 18 for renewal shortly and that there was a significant possibility that exclusivity 19 would not be retained, in the face of NetSpend's aggressive pursuit of retailers. 20 In fact, NetSpend reload cards were already on sale at Walgreens by May 2012. 21 In light of these facts, and Streit's knowledge that Green Dot's purported 22 "exclusivity" at Walmart had significantly eroded following Thompson's 23 departure, 8 Streit's statements were made with deliberate recklessness. 24 25 8 26 In November 2012, the month after Walmart announced its full-scale deal with American Express, a contributor to Forbes.com wrote: "Walmart made Green 27 Dot. Now it's making Bluebird. . . . In 2010, a venture-backed company 28 originally called NextEstate went public largely due to its exclusive deal with the retailer to distribute its general purpose, reloadable, branded prepaid card.

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1 155. Competitive pressure continued to mount in Q2'12: (i) on May 9, 2 2012, American Express announced the launch of its Campus Edition Prepaid 3 Card, a reloadable prepaid Card available in more than 500 Barnes & Noble 4 college bookstores; and (ii) on June 28, PayPal announced that its prepaid cards 5 would be available at approximately 5,500 7-Eleven stores in 2012. 6 The Truth Is Revealed When Green Dot Slashes Its 2012 Guidance 7 156. The truth about defendants' materially misleading guidance was 8 revealed on July 26, 2012, when Green Dot issued a press release announcing 9 its Q2'12 results and dramatically revising FY'12 guidance downward. Just 90 10 days after confirming most of their initial guidance, on April 26, 2012, 11 defendants slashed these figures in half, projecting 10-12% growth in operating 12 revenues (down from 20-24%), based on 5% growth in average number of 13 active cards (down from 20%) and 15% growth in cash transfers (down from 14 20%). Defendants announced that they would discontinue their practice of 15 giving guidance on GDV growth. 16 157. In the press release, defendants attributed their greatly reduced 17 FY'12 forecast to: (1) "the impact of new internal risk policies and controls to 18 improve the security and quality of [Green Dot's] portfolio"; and (2) the 19 expectation that "many of our retailers will start to sell competitive GPR 20 products in addition to our products." In addition, Keatley was quoted as 21 stating: "Because we lack historical data to accurately predict how this will 22 impact our sales, we have taken what we believe to be a conservative view of 23 any potential impact." 24 158. On the same day, Streit and Keatley participated in a conference 25 call with analysts. During the call, defendants for the first time publicly 26 disclosed that Green Dot's retail distribution agreements with Waigreens and 27 28 At some point, after the IPO, and after Walmart financial services executive, Jane Thompson, moved on, Green Dot's deal became non-exclusive."

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1 CVS were up for renewal, raising the specter of the likely loss of exclusivity at 2 the Company's second- and third-most important retailers. Keatley stated: 3 "[W]e're in the middle of at least two different deal negotiations at two of our 4 top five retailers," which were later revealed to be Walgreens and CVS. 5 159. More generally, Keatley stated: "[W]e recently learned that more of 6 our retailers will begin selling competitive GPR products in addition to our 7 products, in some cases beginning in late 2012." Accordingly, defendants 8 "assumed in this re-forecast that most of our retailers would be carrying 9 competitive product going forward." Keatley also explained: "[W]e don't feel 10 like we have enough data or historical experience to accurately predict what 11 will happen to our volumes at other retailers that move to a non-exclusive 12 format. Given this uncertainty, we have taken what we believe to be a 13 conservative view of how sales might be negatively impacted and you see that 14 view reflected in our re-forecast." 15 160. During the conference call, defendants deflected all questions about 16 whether and if American Express's Bluebird card would be coming to Walmart 17 on a permanent basis, stating that it was up to American Express and Walmart 18 to announce such a deal. Four months later, once the Bluebird deal was 19 announced, Green Dot admitted that expected competition from Bluebird was a 20 major reason it cut revenue guidance, despite defendants' previous efforts to 21 downplay the importance of Bluebird's initial introduction at Walmart. During 22 the J.P. Morgan Chase Conference on November 14, 2012, VP of Investor 23 Relations Mammone stated: "[Bluebird is] a big reason behind us cutting our 24 growth expectations because . . . we were taken out of every other checkout 25 lane. So where we used to be in every checkout lane at Walmart, now we are in 26 alternating lanes with Bluebird in one, Green Dot in the next." 27 161. Keatley attributed approximately half of the reduction in guidance 28 Ito increased competition and the other half to more stringent risk controls: "[I]f

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1 you think of the guide-down being from, the midpoint being from 22% revenue 2 growth to now the midpoint is 11%, so you've got about 11% guide-down. You 3 can think of roughly half of that coming from the risk policies and controls and 4 roughly half coming from the new competition." 5 Defendants' Inadequate Explanations for Their Unreasonable Guidance 6 162. At the time of guidance was first given, on January 26, 2012, 7 defendants had already known about the Bluebird pilot and about the upcoming 8 Walgreens and CVS renewals, and consequently that up to 78% of Green Dot's 9 retail chanñ'èl could become nonexclusive in 2012. Yet defendants not only 10 withheld this information from investors, they failed to incorporate this 11 information into their FY' 12 guidance. 12 163. By late 2011, the market had been acutely aware of emerging 13 competitors, such as American Express and NetSpend, both of which were 14 having success penetrating major retail distributors. For this reason, throughout 15 the first two quarters of 2012, analysts had bombarded defendants with 16 questions about sustaining exclusivity, the impact of new competition in the 17 retail channel, and the feasibility of Green Dot's revenue target and card metrics 18 (i.e., GDV, cash transfers, active cards). Providing somewhat vague, but 19 generally positive, responses, defendants maintained Green Dot's FY'12 20 guidance. Now analysts demanded to know what had changed to lead 21: defendants to so abruptly cut revenue guidance in half. As a J.P. Morgan 22 analyst inquired: "I just wanted to ask what changed to trigger the guidance cut 23 because . . . you guys have been hearing these competition concerns for quite 24 I some time from investors." 25 164. Streit offered a startling explanation: "After personally meeting 26 with most of our largest retail partners over the past 90 days, we expect that 27 several new competitive products could be on sale next to Green Dot products 28 at many of our current retail distribution locations later this year or next year."

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1 Streit elaborated that Green Dot reorganized its revenue division beginning in 2 January 2012, which entailed his "personally meet[ing] with every buyer." 3 Based on these meetings, Streit concluded that: "[I]f I were the retailer, and I 4 had many companies coming to me paying me millions of dollars to have access 5 to shelve space, what would I say. And my answer in my own little mental role 6 play was I'd do it. And I think, if you think back to a year or two ago with these 7 contracts which had at that time two, three years left to go, our retailers were 8 telling us they weren't interested in non-exclusivity." 9 165. Streit's explanation was inadequate for three reasons. First, Streit 10 did not identify any new information gleaned from these "meetings," strongly 11 suggesting that they were a trumped up explanation. Indeed, he cited a 12 common-sense deduction regarding the payment of monetary incentives to 13 retailers to agree to sell additional GPR products. This reasoning was no less 14 sound on January 26 and April 26, 2012 as it was on July 26, 2012. Second, it 15 was widely known that the competitive landscape was transformed starting in 16 the second half of 2011, as new competitors such as American Express and 17 NetSpend began aggressively pursuing relationships with retailers and 18 successfully breaking into Green Dot's retail channel (e.g., Walmart and 7- 19 Eleven). Defendants had no reasonable basis to rely on the fact that retailers 20 told Green Dot one to two years ago that they were not interested in non- 21 exclusivity. Third, during the conference call on April 26, 2012, Streit stated 22 that he was already speaking personally to buyers at major retailers. 23 166. Defendants' stated reasons for slashing guidance were not based on 24 new information that arose during the Q2'12. Rather, defendants' disjointed 25 explanations confirm that defendants knew on January 26 and April 26 that their 26 FY'12 revenue guidance had no reasonable basis. 27 167. As alleged above, at paragraphs 143-144, defendants' earlier claim 28 that they lacked sufficient historical data to accurately predict how new

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1 competition would impact sales, was contradicted by their own statements on 2 July 26, 2012. Green Dot slashed its guidance, in part, based on thetwo cases 3 in which "retailers move[d] from an exclusive merchandising display to a non- 4 exclusive display with multiple product[s]." According to Keatley, "[i]n both 5 cases, results have been that our sales growth decreased year-over-year, but our 6 gross number of active cards from those retailers, and the revenue derived from 7 those retailers, has continued to grow." Keatley also stated: "[I]n the handful of 8 retailers where we've seen new competition in the past, we've seen our new 9 card sales take a significant hit,. . . [and] our active cards continue to grow but 10 at a much slower rate." (Emphases added.) Based on this historical data, 11 which they had by no later than April 26, 2012, defendants knew that they had 12 no reasonable basis to ignore the potential impact of new competition on same- 13 store sales growth. 14 168. Analysts were surprised by defendants' sudden pullback on 15 guidance and outlook, given the repeated drum beat that additional competition 16 would only serve to draw attention to an underpenetrated field in which Green 17 Dot is the leader. For example, on July 27, 2012, Sterne Agee issued an analyst 18 report stating: "We have been well aware of NetSpend's success in signing new 19 partners and Western Union noted on its recent call that it will be launching 20 with new partners soon. We had thought Green Dot contemplated this 21 competition in its prior guidance and we generally thought Green Dot could 22 still meet expectations due to a rising tide for the industry, but it appears we 23 were wrong about both points." (Emphasis added.) 24 169. In another analyst report, issued on July 27, 2012, JMP Securities 25 also questioned defendants' rationale for the sudden and drastic reduction in 26 guidance: 27 What happened to retail exclusivity and the company's competitive 28 positioning with its core partners? The company's commentary

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1 relating to their admission that retail exclusivity, either contractual or in practice, is coming to an end seemed quite abrupt. They have not 2 shied away in the past from admitting that the prepaid industry will 3 evolve competitively, but we also heard familiar refrains from management just a few months ago about the strength of their retail 4 relationships and the general stability of terms in recent contract 5 renewals. Did the world turn on a dime over the past 90 days? It 6 seemed that way based on the conference call, although there was no clear explanation as to why the retail channel seems to have reached a 7 tipping point with respect to prepaid competition. 8 9 170. Regarding Green Dot's disclosures on risk controls, a William 10 Blair report dated July 26, 2012, stated: "[W]e are absolutely blindsided by the 11 change in risk controls. The stock will get crushed on this news. 12 Management alluded to tighter risk controls during the March-quarter earnings 13 conference call, but it did not suggest a material impact to growth." 14 171. After the truth was revealed about defendants' materially false 15 and/or misleading statements concerning Green Dot's FY'12 guidance and 16 Green Dot's past experience with head-to-head competition, a number of 17 analysts reported that defendants' credibility had been substantially impaired, 18 which would cause prolonged downward pressure on Green Dot's stock price. 19 For example: 20 a. J.P. Morgan (July 27, 2012): "We think a discount to 21 GDOT's prior multiple is fair given a lack of catalysts and reduction in 22 management credibility." 23 b. Jefferies (July 27, 2012): "We also believe an increasing 24 credibility gap between investors and mgmt may make it difficult to 25 improve negative sentiment in the near term." 26 C. Deutsche Bank (July 27, 2012): "[T]he management team's 27 credibility [is] in question." Indeed, during the conference call, analyst 28 Bryan Keane's first question of Streit was: "[L]et me just ask, Steve, a

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1 tough question. Obviously, these are disappointing results and guidance. 2 Have you given any thought about bringing in maybe a payment operator 3 to run the company as maybe a CEO, and maybe moving up to more of a 4 Chairman-type role?" 5 d. iMP Securities (July 27, 2012): Noting management's "lack 6 of conviction and consistent reasoning behind the updated earnings 7 guidance, as well as the abrupt 'changing tune' regarding retailer 8 exclusivity and brand positioning." 9 10 172. In response to this shocking about face, Green Dot's share price 11 plummeted a whopping 61%, from $23.32 on July 26 to $9.06 on July 27, on 12 extraordinarily heavy trading volume. 13 173. After the end of the Exchange Act Class Period, during Green Dot's 14 Q3'12 earnings call on November 1, 2012, Streit finally confirmed that four of 15 the Company's top five retail distributors were already or soon would become 16 nonexclusive, including Walmart, Walgreens, CVS, and 7-Eleven (which was 17 never contractually exclusive). As to Green Dot's remaining retail distribution 18 relationships, Streit stated that they were "already non-exclusive and have been, 19 I really, forever." 20 Additional Allegations of Scienter 21 174. Further giving rise to a strong inference of scienter, additional facts 22 support that defendants' FY' 12 guidance had no reasonable basis, including 23 that: (1) defendants had already disclosed changes in Green Dot's business that 24 together would cause a 4% drag on revenues in FY' 12; (2) Green Dot failed to

25 meet revenue guidance in Q4'1 1, falling short of projections even before 26 competitors' began widely encroaching on the Company's current retail 27 distribution partners; and (3) there was an unusually-high number of 28 management changes during the Class Period.

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1 175. Green Dot disclosed that the loss of the TurboTax tax refund 2 program and the passage of the Dodd-Frank Wall Street Reform and Consumer 3 Protection Act of 2010 (the "Dodd-Frank Act") would, in combination, cause 4 more than a 4% drag on revenues in FY" 12: 5 a. During the Q1'll conference call, on April 28, 2011, 6 Keatley stated that the loss of the TurboTax refund contract with Intuit 7 will force Green Dot to find a way to replace 3% of total operating 8 revenue; 9 b. In addition, the so-called "Durbin Amendment" to the Dodd- 10 Frank Act contained two provisions that defendants projected would 11 negatively impact Green Dot's revenues in FY'12: 12 i. Before the passage of the Dodd-Frank Act, Green Dot 13 offered a no-fee ATM network for all of its Green Dot-branded 14 cards, but not for the Walmart-branded MoneyCard. The Durbin 15 Amendment required that every customer be allowed at least one 16 free ATM withdrawal per month, forcing Green Dot to implement a 17 no-fee ATM network for its MoneyCard customers as well. During 18 the Company's Q3'11 earnings call on October 27, 2011, Streit 19 stated that this implementation would cost the Company "just 20 slightly more than 1% of total company revenue." 21 22 ii. Also in response to the Durbin Amendment, Green Dot 23 "proactively shut off [its] ACH bill pay service" during Q3'1 1, 24 causing the Company to lose revenues received in connection with 25 the service. ("ACH" refers to the Automated Clearing House, an 26 electronic network for financial transactions in the United States.) 27 Although defendants did not quantify the direct impact of this 28

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1 change on revenues, during the Q3'l 1 earnings call, Streit stated 2 that 1-2% of the Company's customers had used the service. 3 176. Together, the above developments were projected to cause a 4 revenue drag of over 4% in FY'12. In view of this initial hurdle that Green Dot 5 had to clear to achieve any revenue growth, in conjunction with the impact of 6 increased competition in Green Dot's retail channel as alleged herein, 7 defendants knew that their aggressive revenue growth projections for FY' 12 had 8 no reasonable basis. 9 177. As reported by Piper Jaffray on January 27, 2012, although Green 10 Dot's EPS for 4Q'1 1 were in line with analysts' consensus estimate, the 11 Company's revenue of $123 million for the quarter was below the consensus 12 estimate of $127 million. In view of this failure, defendants knew that same- 13 store sales growth could not keep up with aggressive revenue guidance in 14 FY'12 even if competitors had not been successfully penetrating Green Dot's 15 retail distribution network. Thus, the Company's failure to meet revenue 16 guidance in 4Q'l1 provides further evidence that defendants' FY'12 guidance 17 had no reasonable basis. 18 178. Between August 2011 and April 2012, there were a dizzying 19 number of high-level management additions, departures, shuffles and re- 20 shuffles: (1) Eric Duerling was hired to be the GM of the Green Dot branded- 21 card business unit; (2) John Macllwaine was hired as Chief Information Officer; 22 (3) Mark Troughton resigned as President, Cards and Network and two new 23 Executive Vice President slots were created for Kostas Sgoutas (Chief Product 24 Officer, Non-Retail Customer Acquisition) and Eric Duerling (Chief Marketing 25 Officer, Retail Customer Acquisition), who were to report directly to Streit; (4) 26 the two new EVP positions are merged into one Chief Revenue Officer, with 27 28

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1 Kostas Sgoutas to hold the position; and (5) Ralph Calvano was hired as Senior

2 Vice President, Processing. 9 3 179. When examined collectively, the facts establish that defendants 4 acted with scienter, either with knowledge, deliberate recklessness, and/or 5 without any reasonable basis for their statements (as specifically alleged above) 6 when they issued or disseminated, or caused to be issued or disseminated, 7 public documents and statements in the name of Green Dot and about Green 8 Dot that were materially false and/or misleading; knowing that such statements 9 or documents would be issued or disseminated to the investing public; and 10 substantially participated or acquiesced in the issuance or dissemination Of such 11 statements or documents as primary violations of the federal securities laws. 12 180. As alleged in greater detail above, each Individual Defendant, by 13 virtue of his receipt of information reflecting the true facts regarding Green Dot, 14 of his control over, receipt and/or modification of Green Dot's allegedly 15 materially misleading misstatements, and his association with the Company that 16 made him privy to confidential proprietary information concerning Green Dot, 17 participated in the fraudulent scheme alleged herein. 18 Loss Causation 19 181. Plaintiffs incorporate by reference, as if set forth in full, the 20 allegations contained in paragraphs 26-36 and 156-173, above. Defendants' 21 wrongful conduct, as alleged herein, directly and proximately caused the 22 economic loss suffered by Plaintiffs and the Class. 23 182. During the Exchange Act Class Period, Plaintiffs and the Class 24 purchased Green Dot's securities at artificially-inflated prices and were 25 26 9 The revolving door continued after the Class Period. In November 2012, the Copmany's Chief Operating Officer, William Sowell, resigned. At the same 27 time, it was announced that Green Dot hired Kuan Archer as its Chief Technical 28 Officer and EVP of Product Development and Jim Koster as SVP of Human Resources.

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1 damaged when Green Dot's price declined significantly when information 2 correcting defendants' materially false and misleading statements and omissions 3 was revealed to the market, causing investors' losses. 4 183. On July 26, 2012, after the market closed, Green Dot issued a press

5 release disclosing that it was drastically slashing its FY'12 guidance. Despite 6 posting a 17% increase in non-GAAP total operating revenues, an 8% increase 7 in active cards, and a 10% GDV increase (year-over-year) in Q2'12, defendants 8 cut projected non-GAAP total operating revenue growth for FY'12 in half, to 9 just 10-12%. Similarly, defendants greatly reduced BPS guidance from a range 10 of $1.65-I.70 to a range of $1.29-1.32, and full-year active card growth to a 11 mere 5%. 12 184. According to the July 26 press release, Green Dot cut guidance for 13 two reasons: (1) "the impact of new internal risk policies and controls to 14 improve the security and quality of [Green Dot's] portfolio"; and (2) "many of 15 [the Company's] retailers will start to sell competitive GPR products in addition 16 to [Green Dot's] products." Green Dot also admitted that "[b]ecause we lack 17 the historical data to accurately predict how [the new competition] will impact 18 [Green Dot's] sales, we have taken what we believe to be a conservative view 19 of any potential impact." 20 185. During a conference call with analysts after the market close on 21 July 26, 2012, Streit and Keatley attributed approximately half of the reduction 22 in guidance to increased competition and the other half to more stringent risk 23 controls. Keatley stated: "[I]f you think of the guide-down being from, the 24 midpoint being from 22% revenue growth to now the midpoint is 11%, so

25 you've got about 11% guide-down. You can think of roughly half of that 26 coming from the risk policies and controls and roughly half coming from the 27 new competition." 28

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1 186. As alleged in greater detail in paragraphs 156-173 above, based on 2 information disclosed in Green Dot's press release and during Streit and 3 Keatley's conference call on July 26, 2012, the market learned for the first time 4 of the following: 5 a. There was a significant possibility that Green Dot would lose 6 exclusivity at two of its top five retailers, later revealed as Walgreens and 7 CVS, because their retail distribution agreements were up for renewal and 8 renegotiation in 2012. 9 b. In formulating its guidance, Green Dot's projections of 10 same-store sales growth failed to incorporate the potential impact of 11 increased competition in four of the Company's top five retailers given: 12 (1) the launch of American Express's competing product in Walmart; (2) 13 the significant possibility that Green Dot would lose exclusivity at 14 Walgreens and CVS; and (3) the launch of NetSpend's competing product 15 in 7-Eleven. 16 C. Green Dot lacked the ability to precisely forecast the 17 potential impact of widespread increased competition on same-store sales 18 growth, and in the limited cases in which Green Dot did lose exclusivity 19 at a retailer, new card sales took a "significant hit" and active cards grew 20 at a "much slower rate." 21 22 d. Green Dot's products were being used for several other 23 categories of illicit activity besides identity fraud, and a significant 24 portion of the Company's growth and revenue came from "something that 25 we don't want [cards] used for," to wit, paying extortion/protection 26 money, paying a purported "fine" to the FBI to unlock one's computer, 27 paying a purported "commission" for a government grant, etc. 28

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1 e. To the extent that Green Dot's past revenue growth had been 2 derived from illegal activities now being rejected, the Company's 3 prospects would be diminished as a result. 4 187. As this new information came to light, the market was caught 5 totally by surprise and analysts reacted with harsh criticism of the Company, as 6 set forth in paragraphs 30, 33-35, 168-171. 7 188. In reaction to defendants' corrective disclosures, the market drove 8 down the value of Green Dot's stock. Between the close of trading on July 26, 9 2012, and the close of trading on July 27, 2012, the Company's stock price 10 plummeted 6 1.15%, from $23.32 to $9.06, on unusually heavy volume. 11 Presumption of Reliance (Fraud-on-the-Market Doctrine) 12 189. The market for Green Dot's securities was open, well-developed 13 and efficient at all relevant times. As a result of the materially false and/or 14 misleading statements and/or failures to disclose, Green Dot's securities traded 15 at artificially-inflated prices during the Exchange Act Class Period. On March 16 25 2012, the Company's stock closed at $32.36 per share, the high point during 17 the Exchange Act Class Period. Plaintiffs and other members of the Class 18 purchased or otherwise acquired the Company's securities relying upon the 19 integrity of the market price of Green Dot's securities and market information 20 relating to Green Dot, and have been damaged thereby. 21 190. During the Exchange Act Class Period, the artificial inflation of 22 Green Dot's securities was caused by the material misrepresentations and/or 23 omissions particularized in this Complaint causing the damages sustained by 24 Plaintiffs and other members of the Class. As described herein, during the 25 Exchange Act Class Period, defendants made or caused to be made a series of 26 materially false and/or misleading statements about Green Dot's business, 27 prospects, and operations. These material misstatements and/or omissions 28

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1 created an unrealistically positive assessment of Green Dot and its business, 2 operations, and prospects, thus causing the price of the Company's securities to 3 be artificially inflated at all relevant times, and when disclosed, negatively 4 affected the value of the Company securities. Defendants' materially false 5 and/or misleading statements during the Exchange Act Class Period resulted in 6 Plaintiffs and other members of the Class purchasing the Company's securities 7 at such artificially-inflated prices, and each of them has been damaged when the 8 revelation of the previously-undisclosed facts caused Green Dot's price to drop 9 in response. 10 191. At all relevant times, the market for Green Dot's securities was an 11 efficient market for the following reasons, among others: 12 a. Green Dot securities met the requirements for listing and 13 were listed and actively traded on the NYSE, a highly efficient and 14 automated market; 15 b. As a regulated issuer, Green Dot filed periodic public reports 16 with the SEC and/or the NYSE; 17 C. Green Dot regularly communicated with public investors via 18 established market communication mechanisms, including through 19 regular dissemination of press releases on the national circuits of major 20 newswire services and through other wide-ranging public disclosures, 21 such as communications with the financial press and other similar 22 reporting services; and/or 23 24 d. Green Dot was followed by securities analysts employed by

25 brokerage firms who wrote reports about the Company, and these reports 26 were distributed to the sales force and certain customers of their 27 respective brokerage firms. Each of these reports was publicly available 28 and entered the public marketplace.

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1 e. The market for Green Dot's securities promptly digested 2 new, current information regarding Green Dot from all publicly available 3 sources and reflected such information in Green Dot's stock price. 4 192. Under these circumstances, Green Dot's markets are efficient and, 5 therefore, investors' purchases of Green Dot's securities at artificially-inflated 6 market prices give rise to a class-wide presumption of reliance. 7 Inapplicability of Safe Harbor 8 193. The statutory safe harbor provided for forward-looking statements 9 under certain circumstances does not apply to any of the statements alleged to 10 be false and misleading herein that relate to then-existing facts and conditions. 11 In addition, to the extent the statements alleged to be false are characterized as 12 forward looking, they were not sufficiently identified as "forward-looking 13 statements" when made and there were no meaningful cautionary statements 14 identifying important factors that could cause actual results to differ materially 15 from those in the purportedly forward-looking statements. In the alternative, to 16 the extent that the statutory safe harbor is determined to apply to any forward- 17 looking statements pleaded herein, defendants are liable for those false forward- 18 looking statements because at the time each of those forward-looking statements 19 was made, the speaker had actual knowledge that the forward-looking statement 20 was materially false or misleading, and/or had no reasonable basis for believing 21 it to be true, and/or the forward-looking statement was authorized or approved 22 by an executive officer of Green Dot who knew that the statement was false 23 when made. 24 Defendants Violated Section 10(b) of the 25 Exchange Act and Rule 10b-5 Promulgated Thereunder 26 194. Defendants, individually and in concert, directly and indirectly, by 27 the use, means or instrumentalities of interstate commerce and/or of the mails, 28 engaged and participated in a continuous course of conduct to conceal adverse

CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS 70 Case 2: 92-GW-CW Document 19 Filed 12/27/12 Page 74 of 82 Page ID #:

1 material information about Green Dot's guidance and projected same-store sales 2 growth for FY'12 and the scope and duration of the Company's exclusivity with 3 retail distributors. Defendant Streit also knowingly misstated the Company's 4 ability to give any prediction of the effect of head-to-head competition on Green 5 Dot, as evidenced by his later admission about past experience. Defendants also 6 gave 2012 guidance knowing that new, heightened risk controls and screening 7 measures would have a negative impact on, inter alia, activations and revenues 8 previously generated by the use of legally purchased cards or MoneyPaks for 9 illicit purposes. 10 195. Defendants employed devices, schemes and artifices to defraud, 11 while in possession of material adverse non-public information and engaged in 12 acts, practices, and a course of conduct as alleged herein in an effort to assure 13 investors of Green Dot's value and performance and continued substantial 14 growth, which included the making of, or the participation in the making of, 15 untrue statements of material facts and omitting to state material facts necessary 16 in order to make the statements made about Green Dot in the light of the 17 circumstances under which they were made, not misleading, as set forth more 18 particularly herein, and engaged in transactions, practices and a course of 19 business which operated as a fraud and deceit upon the purchasers of Green Dot 20 common stock during the Exchange Act Class Period. 21 196. As a result of the dissemination of the materially false and 22 misleading information and failure to disclose material facts set forth above, the 23 market price of Green Dot's securities was artificially-inflated during the 24 Exchange Act Class Period. Unaware that the market price of the Company's 25 securities was artificially inflated, and relying directly or indirectly on the false 26 and misleading statements made by defendants, or upon the integrity of the 27 market in which the common stock traded, and/or on the absence of material 28 adverse information that defendants knew or disregarded with deliberate

CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS 71 Case 2: 92-GW-CW Document 19 Filed 12/27/12 Page 75 of 82 Page ID #:

1 recklessness but did not publicly disclosed during the Exchange Act Class 2 Period, Plaintiffs and the other members of the Class purchased or otherwise 3 acquired Green Dot securities during the Exchange Act Class Period at 4 artificially-high prices and were damaged when the previously-concealed facts

5 came to light and Green Dot's price plummeted. 6 197. Plaintiffs and other members of the Class were unaware of the 7 falsity and/or materially misleading nature of defendants' misrepresentations 8 and omissions at the time they were made, and believed them to be true. Had 9 Plaintiffs and the other members of the Class known the truth regarding Green 10 Dot's financial performance and outlook, Plaintiffs and the other members of 11 the Class would not have purchased their Green Dot securities or would not 12 have done so at the artificially inflated prices for which they paid. 13 198. As a direct and proximate result of defendants' wrongful conduct, 14 Plaintiffs and the other members of the Class suffered damages in connection 15 with their respective purchases and sales of the Company's common stock 16 during the Exchange Act Class Period. 17 COUNT IV 18 Violation of Section 20(a) of the Exchange Act (Against the Individual Defendants) 19 20 199. Plaintiffs repeat and reallege each and every allegation pled under 21 Count III above as if fully set forth herein. 22 200. Individual Defendants Streit and Keatley acted as controlling 23 persons of Green Dot within the meaning of Section 20(a) of the Exchange Act 24 as alleged herein. By virtue of their high-level positions, and their ownership

25 and contractual rights, substantial participation in and/or awareness of the

26 Company's operations and/or intimate knowledge of the materially false and 27 misleading statements contained in documents filed with the SEC and 28 disseminated to the investing public, the Individual Defendants had the power

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i-i to influence and control and did influence and control, directly or indirectly, the

2 decision-making of the Company, including the content and dissemination of

3 the various statements that Plaintiffs contend are false and misleading. The 4 I Individual Defendants were provided with or had unlimited access to copies of 5 the Company's reports, press releases, public filings, and other statements

6 alleged by Plaintiffs to be misleading prior to and/or shortly after these

7 statements were issued and had the ability to prevent the issuance of the

8 statements or cause the statements to be corrected. 9 201. The Individual Defendants each had direct and supervisory

10 involvement in the day-to-day operations of the Company and therefore are

11 presumed to have had the power to control or influence the particular

12 transactions giving rise to the securities violations alleged herein, and exercised

13 the same. 14 202. As set forth above, Green Dot and the Individual Defendants each

15 violated Section 10(b) and Rule lOb-5 by their acts and omissions as alleged in

16 this Complaint. By virtue of their positions as controlling persons, the

17 Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act.

18 As a direct and proximate result of defendants' wrongful conduct, Plaintiffs and

19 the other members of the Class suffered damages in connection with their

20 purchases of the Company's common stock during the Exchange Act Class 21 Period. 22 PRAYER FOR RELIEF 23 WHEREFORE, Plaintiffs pray for relief and judgment, as follows: 24 (a) Determining that this action is a proper class action under Rule 23

25 of the Federal Rules of Civil Procedure; 26 (b) Awarding compensatory damages in favor of Plaintiffs and the

27 other Class members against all defendants, jointly and severally, for all

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ii I damages sustained as a result of defendants' wrongdoing, in an amount to be 2 proven at trial, including interest thereon; 3 (c) Awarding Plaintiffs and the Class their reasonable costs and 4 expenses incurred in this action, including counsel fees and expert fees; and 5 (d) Such other and further relief as the Court may deem just and 6 proper. 7 JURY TRIAL DEMANDED 8 Plaintiffs hereby demand a trial by jury.

10 I DATED: December 27, 2012 GLANCY BINKOW & GOLDBERG LLP 11 By: 3 12 Lionel Z. Glancy Robin B. Howald 13 Robert V. Prongay 14 1925 Century Park East, Suite 2100 Los Angeles, California 90067 15 Telephone: (310) 201-9150 16 Facsimile: (310) 201-9160 17 LAW OFFICES OF HOWARD G. SMITH 18 Howard G. Smith 19 3070 Bristol Pike, Suite 112 Bensalem, Pennsylvania 19020 20 Telephone: (215) 638-4847 21 Facsimile: (215) 638-4867 22 Attorneys for Lead Plaintiff Bryan Zee 23

CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS 74 Case 2: 92-GW-CW Document 19 Filed 12/27/12 Page 78 of 82 Page ID #:

1 SCOTT + SCOTT LLP Anne L. Box 2 John Jasnoch 3 707 Broadway, Suite 1000 4 San Diego, California 92101 Telephone: (619) 233-4565 5 Facsimile: (619) 233-0508 6 Attorneys for PlaintffLocal No. 38 7 International Brotherhood of Electrical 8 Workers Pension Fund 9 ROBBINS GELLER RUDMAN 10 & DOWD LLP 11 Darren J. Robbins David C. Walton 12 655 West Broadway, Suite 1900 13 San Diego, California 92101 Telephone: (619) 231-1058 14 Facsimile: (619) 231-7423 15 16 Additional Attorneys for Plaints 17 18 19 20 21 22 23 24 25 26 27 28

CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS 75 Case 2:12-cv-06492-GW-CW Document 19 Filed 12/27/12 Page 79 of 82 Page ID #:294

CERTIFICATION PURSUAf To ThE FEDERAl. SECURITiES LAWS I, Walter 0' Malley, hereby certify that the following is true and correct knowledge, information and belief: to the best of my

1. 1 am President of the Local No, 38 International Brotherhood Of Electrical Workers Pension Fund ("IBEW Local No. 38").

2. I have reviewed the Amended Complaint in this matter and authorize its filing on behalf Of IBEW Local No. 38.

3. IBEW Local No. 38 is willing to serve as a representative party on behalf of the purchasers of Green Dot Corporation securities during the Class Period, including providing testimony at deposition and trial, if necessary.

4. During the Class Period, IBEW Local No. 38 purchased andlor sold the security that is the subject of the Complaint as set forth on the attached Schedule A.

5. IBEW Local No. 38 did not engage in the foregoing transactions at the direction of counsel nor in order to participate in any private action arising under the Securities Act of 1933 (the "Securities Act") or the Securities Exchange Act of 1934 (the "Exchange Act").

6. During the three-year period preceding the date of my signing this Certification, MEW Local No. 38 has sought to serve or served as a representative party or lead plaintiff on behalf of a class in the following private action arising under the Securities Act or the Exchange Act:

Local No. 38 International Brotherhood Of Electrical Workers Pension Fundy. American Express Company, et al., Case No. I ;09-cv-03016-W}JP (S.DN.Y.) (moved for lead plaintiff and was appointed.)

Bristol County Retirement System v. AlLcripts HealthcareSolutions, Inc. et at., Case No. 1:12-cv-03297-JFH (ND. Ill.) (moved for lead plaintiff and was appointed.)

7. IBEW Local No. 38 will not accept any payment for serving as a representative party on behalf of the class beyond its pro rata share of any recovery, except for such reasonable costs and expenses (including lost wages) directly relating to the representation of the class as ordered or approved by the Court. Case 2:12-cv-06492-GW-CW Document 19 Filed 12/27/12 Page 80 of 82 Page ID #:295

I declare under penalty of pel:jury that the foregoing is true and corrcct Executed at 1€Efe1 JfIAJ(SL, Oh.1 p (City, State)

LOCAL NO. 38 INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORWERS PENSION FUN!) l( 70W -1157\ M & Date Wakter O'Malley, President

tj Case 2:12-cv-06492-GW-CW Document 19 Filed 12/27/12 Page 81 of 82 Page ID #:296

SCHEDULE A LOCAL NO. 38 INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS PENSION FUND

Transactions in GREEN DOT CORPORATION

Action I Trade Date - (Buy/Sell) Quantity Price Per Share 11/26/2010 Buy 100 $53.52 11/29/2010 Buy 125 $53.59 11/30/2010 Buy 75 $55.36 12/01/2010 Buy 25 $59.32 12/02/2010 Buy 75 $59.44 12/03/2010 Buy 210 $59.43 12/08/2010 Buy 155 $58.90 12/21/2010 Buy 400 $51.32 12/22/2010 Buy 75 $50.94 05/24/2012 Buy 1300 $21.70 05/25/2012 Buy 250 $22.03 Case 2:1 92-GW-CW Document 19 Filed 12/27/12 Page 82 of 82 Page ID #:297

PROOF OF SERVICE VIA U.S. MAIL 2 I, the undersigned, say: 3 I am a citizen of the United States and am employed in the office of a member of the Bar of this Court. I am over the age of 18 and not a party to the within action. 4 My business address is 1925 Century Park East, Suite 2100, Los Angeles, California 5 90067.

6 On December 27, 2012, I caused to be served the following document:

7 CORRECTED CONSOLIDATED COMPLAINT FOR 8 VIOLATIONS OF THE FEDERAL SECURITIES LAWS

9 By Mail: By placing true and correct copies thereof in individual sealed lb envelopes, with postage thereon fully prepaid, which I deposited with my employer for collection and mailing by the United States Postal Service. I am readily familiar 11 with my employer's practice for the collection and processing of correspondence for mailing with the United States Postal Service. In the ordinary course of business, this 12 correspondence would be deposited by my employer with the United States Postal 13 Service that same day.

14 On the following parties:

15 Kevin P. Muck Fenwick & West LLP 16 555 California Street, 12th Floor San Francisco, CA 94104 17 Jay L. Pomerantz 18 Fenwick and West LLP 801 California Street 19 Mountain View, CA 94041 20 Counsel for Defendants 21 I certify under penalty of perji ited States of 22 America that the foregoing is true and er 27, 2012, at 23 Los Angeles, California.

PROOF OF SERVICE