Broker-Dealer Litigation - Greenberg Traurig LLP

comprised of a retirement system and an investment fund. The court found that the NYC Funds
had the largest financial losses using either a LIFO or FIFO method of calculating losses and,
thus, was presumptively the most adequate lead plaintiff. In doing so, the court rejected the
argument that one of the NYC Fund’s member’s losses should not be considered because it was
subject to unique defenses as a net seller and net gainer during the class period. The court found
that the NYC Funds still had the greater financial losses even if that member’s losses were not
considered. The court also rejected the argument that it should focus on factors other than losses,
such as net shares purchased and net expenditures, given that the difference in total losses
suffered by the competing movants was insignificant. Since there was no evidence that the NYC
Funds would not fairly and adequately represent the class, the court recommended that the NYC
Funds be appointed lead plaintiff after finding that it satisfied the typicality and adequacy
requirements of Fed. R. Civ. P. 23. The court also recommended that the NYC Funds’ choice of
lead counsel be approved.
Bang v. Acura Pharms., Inc., 2011 WL 91099 (N.D. Ill. Jan. 11, 2011).
In a putative securities fraud class action, the court considered two competing motions for
appointment as lead plaintiff filed by an individual investor and a group of three investors (the
“Investors Group”). The court found that the Investors Group had a slightly larger combined
loss amount than the individual investor and, thus, the Investors Group was the presumptive most
adequate lead plaintiff. The individual investor argued that the Investors Group had been
improperly cobbled together solely to attain lead plaintiff status. The court found that two of the
members of the Investor Group had a pre-existing relationship and there was no proof that the
group could not adequately serve as lead plaintiff. On the other hand, the court found that the
individual investor’s atypical high trading volume might subject him to unique defenses and,
thus, he was likely an inadequate lead plaintiff. Accordingly, after finding that the Investor
Group met the requirements of Fed. R. Civ. P. 23, the court appointed the group lead plaintiff
and approved its choice of counsel.
Hufnagle v. RINO Int’l Corp., 2011 WL 710704 (C.D. Cal. Feb. 14, 2011).
After consolidating six related securities fraud class actions, the court considered ten
competing motions for appointment as lead plaintiff. The court found that a public investment
company, Stream, reported the largest financial interest in the action and, thus, was
presumptively the most adequate lead plaintiff. The court rejected the argument that Stream did
not have constitutional standing because the court found that Stream had invested its own assets
to purchase the defendant company’s stock and operated like a mutual fund, not as an investment
advisor. The court also noted that courts routinely appoint foreign investors as lead plaintiff and
there was no demonstration that a judgment of the court would not enjoy res judicata effect in
Luxembourg, where Stream was located. Finally, the court rejected the argument that purchases
of defendant’s stock after full or partial disclosures of the alleged fraud disqualified Stream as
lead plaintiff, noting that such purchases “even after the close of the class period do not destroy
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