Corporate Legal Times
July 7, 2000
Five years after it was enacted, provisions of the Private Securities Litigation Reform Act are prompting district-level judges to take a more active role in selecting lead plaintiffs and lead plaintiffs' counsel. The judges for two cases, both arising from the Northern District of California, have appointed individual investors as lead plaintiff instead of institutional investors or some mish-mash of plaintiffs organized by wannabe lead plaintiffs' counsel.
"The whole point of the reform was to install a lead plaintiff with substantive decision-making ability and authority," wrote Judge William H. Alsup in a 28-page opinion. But that's not what is happening. The Nov. 28, 1999 order denied several law firms' efforts to pool investors together into a lead plaintiffs' group in a case against Network Associates Inc., a Santa Clara-based company that makes software to fight computer viruses. Robert A. Vatuone, who had lost about $28,500 during a months-long dive in Network Associates' stock price, was eventually appointed lead plaintiff by Judge Alsup, held a beauty contest of his own and appointed San Francisco's Lieff Cabraser Heimann & Bernstein as his lawyers.