Broker-Dealer Litigation - Greenberg Traurig LLP

typicality.” Accordingly, the court tentatively found that Stream met the requirements of Fed. R.
Civ. P. 23 and tentatively appointed it as lead plaintiff and approved its choice of counsel.
Hufnagle v. RINO Int’l Corp., 2011 WL 710676 (C.D. Cal. Feb. 16, 2011).
In a consolidated securities fraud class action, the district court had tentatively appointed
a foreign investment company, Stream, as lead plaintiff. Here, the court adopted its previous
decision in Hufnagle v. RINA Int’l Corp., 2011 WL 710676 (C.D. Cal. Feb 14, 2011) for reasons
set forth in that opinion. The court further noted that evidence had now established that Stream
had purchased all of its shares of stock in the defendant company on the NASDAQ exchange
and, thus, was entitled to the protection of U.S. securities laws. The court also found that Stream
had provided evidence that it operated similarly to a U.S. open-ended mutual fund and, thus,
adequately established its standing to pursue claims related to the underlying securities it
purchased on behalf of its shareholders. Finally, the court noted that the movant with the second
largest financial interest was a group comprised of unrelated individuals who had no pre-existing
relationship prior to the litigation. The court noted that while courts disagree as to whether
groups of unrelated investors should be allowed to aggregate their losses for purposes of
obtaining lead plaintiff status, “the emerging majority position looks askance at the appointment
of a group of unrelated persons as lead plaintiff.” Accordingly, the court appointed Stream lead
plaintiff and approved its choice of counsel.
Perlmutter v. Intuitive Surgical, Inc., 2011 WL 566814 (N.D. Cal. Feb. 15, 2011).
In a putative securities fraud class action, the district court considered three competing
motions for appointment as lead plaintiff filed by a police retirement system and two individual
investors. In determining which movant had the largest financial interest, the court found that
recoverable damages were more indicative of financial interest than total losses suffered trading
in a particular stock. Thus, although one of the individual investors had the greatest total losses
using the FIFO methodology of calculating loss, that investor likely had little, if any, recoverable
damages because he was a net seller during the class period and had not retained any shares in
the defendant company’s stock at the end of the class period. Rather, the court found that the
retirement system had the greatest financial interest in the outcome of the litigation because it
had the greatest number of retained shares at the end of the class period. The court declined to
consider claimed tax losses in determining which movant had the greatest financial interest
because no court decisions were cited to support such a method. The court also rejected the
argument that the retirement system’s failure to file a complaint weighed against its appointment
as lead plaintiff because the Private Securities Litigation Reform Act of 1995 does not require a
movant to file a complaint. The court also accepted that the retirement system’s certification
regarding its stock trades was correct despite alleged inaccuracies raised by competing movants.
Accordingly, after finding that the retirement system met the requirements of Fed. R. Civ. P. 23,
the court appointed it lead plaintiff and approved its choice of counsel.
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