No Perpetual Enemies

Under the PSLRA, the presumptive lead plaintiff in a securities class action is the party with the largest financial interest in the relief sought by the class. Courts have struggled, however, with how to apply this presumption when faced with proposed lead plaintiff groups. In In re Flight Safety Technologies, Inc. Sec. Litig., 2005 WL 2663033 (D. Conn. Oct. 19, 2005), two competing plaintiffs’ groups joined forces and sought to have eight investors named as co-lead plaintiffs. The court found that “appointing eight unrelated and unfamiliar plaintiffs as co-lead plaintiffs, when no preexisting relationship is evident, would be counter to both the terms and the spirit of the PSLRA.” Instead, the court appointed one individual investor (who had alleged the most potential damages) and one institutional investor (noting that Congress had expressed a preference for institutional investors).

Quote of note: “In the briefs submitted prior to the date on which the pending joint motion for appointment was filed, the Rogers Group and the Ozkam Group spent considerable time and effort criticizing the ability of the members of the other group to serve as lead plaintiffs in this action. As noted previously, those groups have since abandoned their concerns, however, and combined with those previously deemed inadequate in order to pursue their remedy. This gives new meaning to Lord Palmerston’s quotation: ‘We have no eternal allies and we have no perpetual enemies. Our interests are eternal and perpetual, and these interests it is our duty to follow.'”

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