Broker-Dealer Litigation - Greenberg Traurig LLP

that a lead plaintiff should be appointed. Accordingly, the court declined to appoint a lead
plaintiff.
Niederklein v. PCS Edventures!.com, Inc., 2011 WL 759553 (D. Idaho Feb. 24, 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 two individual
investors. The court found that the group of investors had no pre-existing relationship and failed
to present evidence that the group was cohesive and not purely lawyer-driven. The group’s
motion failed to set forth an established process of sharing information, a protocol for how
decisions would be made, or any other indication that the individual members would act
cohesively. The court declined to consider the group’s individual members separately for
appointment as lead plaintiff because the group had not requested such relief. Next, the court
rejected several arguments against the adequacy of the individual investor to serve as lead
plaintiff. The court held that the individual investor’s objection to a group serving as lead
plaintiff did not indicate a failure to understand the fiduciary obligations of a lead plaintiff, as the
individual investor’s objection did not suggest any conflict of interest with other class members.
The court also found that clerical errors in the individual investor’s sworn certification did not
undermine his ability to fairly and adequately represent the class. Finally, the court rejected as
conjecture the argument that the individual investor was inadequate because he had selected
counsel that had been subject to non-monetary sanctions for lack of communication with a client
in an unrelated matter three years prior. Accordingly, after finding that the individual investor
satisfied the requirements of Fed. R. Civ. P. 23, the court appointed him lead plaintiff and
approved his choice of counsel.
Moomjy v. HQ Sustainable Maritime Indus., Inc., 2011 WL 4048796 (W.D. Wash. Sept. 12,
2011).
In a putative securities fraud class action, the district court considered six competing
motions for appointment as lead plaintiff. The court found that a foreign investment fund based
in Estonia (the “Estonian Fund”) undisputedly had greater losses than any other movant and
appeared to satisfy the typicality and adequacy requirements of Fed. R. Civ. P. 23. Despite
geographic remoteness, the court found that the fund could adequately protect the interests of the
class because the fund manager was fluent in English, frequently traveled to the US, and
scheduling and communication difficulties would be minimized with the use of modern
technology. One movant argued that the Estonian Fund should not be appointed as lead plaintiff
because a judgment in favor of defendants may not be binding on the Estonian Fund under
Estonian law. Noting that courts routinely appoint foreign investors as lead plaintiffs, the court
found that such res judicata concerns were speculative and insufficient to rebut the presumption
that the Estonian Fund was the most adequate plaintiff. The court also noted that the Estonian
Fund had filed a statement agreeing to be bound by any judgment of the court. The court also
rejected the argument that the Estonian Fund should not be appointed lead plaintiff because
Estonian law would not find a class action judgment binding on other Estonian investors. This
D.2
D.2
190