When talking about securities class action suits there is a list of key players involved. These parties include: attorneys – which represent both the plaintiff and the defendant in the case, the lead plaintiff who “leads” the class of damaged investors and represents their interests, the public company that is being sued (the defendant). In the event that a suit is settled and a fund is established, the claims administrator plays an important role as well. Today we are going to discuss an important player in the mix, that of the lead plaintiff in the suit.
A lead plaintiff is most often a group or single shareholder that is selected by the court to represent the class. A lead plaintiff is also usually the party with the most stake in the financial outcome sought by the class as a whole. Whether the lead plaintiff is an individual, group of individuals, or investment fund fiduciaries, they are responsible for selecting counsel for the class. These individuals or entities request to be lead plaintiff within 60 days of notice from when the lawsuit is initially filed, and must prove themselves to be capable and the most appropriate party to represent the interests of the class as a whole.
The 2013 Securities Class Action Filings Review & Analysis by Cornerstone Research had some key findings about lead plaintiffs for the year.
• They concluded that since 2006, the majority of settlements had institutional investors as lead plaintiffs as opposed to individuals.
• Among those institutional investors, over 55% of settlements involved public pensions as lead plaintiffs.
• On average in 2013, a settlement with a public pension as the lead plaintiff was around $23 million, compared to $3 million for cases without public pensions as the lead plaintiffs.
Whether the lead plaintiff is an individual, group of individuals, or public pension, the role is consistent. The lead plaintiff works with attorneys and the court to oversee the direction of the litigation and appear in pre-trial conferences on behalf of the class. Sometimes this representative may receive additional compensation for its role as lead plaintiff in the event that the suit is settled.
For more information on securities class action litigation and the role of the lead plaintiff, contact Battea for more information on class action lawsuits and the role of the lead plaintiff.