The 10b-5 Daily has previously posted about the remarkable lead plaintiff/lead counsel order in the Terayon Communications securities class action pending in the N.D. of Cal.
In Judge Patel’s order, she removed Capital Partners and one of its employees as lead plaintiffs and wondered “whether counsel for plaintiffs actively participated in or provided advice to plaintiffs regarding their scheme to cause a fall in Terayon’s stock price.” The court found “it is probable that there is a conflict not only between lead plaintiffs and the class but also between lead counsel and the remainder of the class.” Lead counsel was asked to provide a written response to a number of questions and defendants were given leave to take further discovery on the issue.
The written response has been submitted in a March 24 filing by lead counsel. According to an article (via law.com – free regist. req’d) in The Recorder, lead counsel argued “that some of the contentions advanced by defendants are manifestly wrong, and led the court to express concern that this action might be the product of improper conduct, when in fact there was no improper conduct.” Lead counsel also provided the court with information about its communications with Cardinal and denied that it had extended the class period to hide Cardinal’s short position in Terayon’s stock.
Quote of note: “The firm also asked to have another hearing before Patel to further defend its actions in [the case]. Patel has yet to decide if she’ll schedule another hearing.”