Broker-Dealer Litigation - Greenberg Traurig LLP

domestic retirement system. The court determined that the foreign institutional investor, Danica,
had the greatest losses, which exceeded the next movant’s losses by enough to offset that
movant’s greater net funds expended and net shares purchased. The court rejected one movant’s
attempt to calculate losses using a different holding date and price chosen by its expert because
the court held that a 90-day “lookback period” for calculating losses should apply absent some
credible argument to the contrary. The court also noted that the competing movant was an
investment advisor and might lack constitutional standing to assert claims based on all his shares
of stock. The court further expressed concerns about this movant’s suitability as lead plaintiff
due to certain procedural maneuvers by its counsel that the court found to be forum-shopping.
Finally, the court rejected several attempts to rebut the presumption that Danica was the most
adequate lead plaintiff. Specially, the court found that: (a) although Danica was a net seller
during the class period, it did not benefit from the fraud because all of its shares were sold after it
had been harmed by partial corrective disclosures; (b) purported conflicts resulting from alleged
relationships between Danica and the defendant were merely speculative; (c) Danica’s status as a
foreign entity did not render it an improper lead plaintiff, since it was suing as a result of
purchases made on a domestic securities exchange; and (d) Danica did not lack constitutional
standing as an investment advisor because as a pension fund it had purchased defendant’s stock
in its own name. Accordingly, after finding that Danica met the requirements of Fed. R. Civ. P.
23, the court appointed it lead plaintiff and approved its choice of counsel.
Richman v. Goldman Sachs Group, Inc., 274 F.R.D. 473 (S.D.N.Y. 2011).
After consolidating six related putative securities fraud class actions, the court considered
three competing motions for appointment as lead plaintiff filed by: (i) a group of pension funds
(the “Pension Funds Group”); (ii) a group of foreign and domestic institutional investors (the
“Institutional Group”); and (iii) an individual investor who bought and sold stock and options
during the class period. The court first rejected the individual investor’s argument that neither
the Pension Funds Group, nor the Institutional Group could adequately represent options
purchasers and, therefore, the individual investor should be appointed as lead plaintiff. The court
noted that the individual investor’s claimed losses were de minimis and that options purchasers’
interests could be adequately protected in other ways. Next, the court rejected the Pension Funds
Group’s arguments regarding the composition of the Institutional Group noting that groups may
be formed by lawyers for the purposes of obtaining lead plaintiff status and that foreign investors
are entitled to the protection of U.S. securities laws. The court also rejected the Institutional
Group’s argument that losses of one of the members of the Pension Funds Group should not be
considered because it was a net seller during the class period. Notwithstanding its sales, the
Pension Funds Group member still suffered losses during the class period and the court found no
reason why such losses should not be recognized. The court then found that the Pension Funds
Group was entitled to presumptive lead plaintiff status because it had the greatest financial losses
using either a LIFO or FIFO methodology. The court rejected the Institutional Group’s
argument that the Pension Fund Group’s larger losses should be discounted in favor of the
Institutional Group’s larger number of net shares purchased and net funds expended. The court
noted that most courts agree that the largest loss is the critical factor in determining which
movant has the largest financial interest. Accordingly, after finding that the Pension Funds
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