(Reuters) - What is going on with lead plaintiffs in securities class actions?
A few months back, I told you about a controversy in litigation over Snap’s initial public offering. After a year and a half of intense litigation, with a trial date looming, the court-appointed lead plaintiff suddenly decided he couldn’t continue in the case for health reasons. His lawyers at Kessler Topaz Meltzer & Check proposed swapping in new leads of their choice. Snap’s lawyers at Wilson Sonsini Goodrich & Rosati opposed the swap, as did plaintiffs' lawyers representing different lead plaintiffs candidates. Last month, U.S. District Judge Stephen Wilson of Los Angeles ruled that the lead plaintiff selection process must begin anew.
Now we have nearly the exact same scenario in consolidated securities litigation before U.S. District Judge Richard Seeborg in San Francisco over a $230 million initial coin offering for the cryptocurrency enterprise Tezos. More than a year into the case, after investors squeaked past dismissal and filed their opening class certification brief, lead counsel Hung Ta and LTL Attorneys moved last month to change out lead plaintiff Arman Anvari for two different Tezos investors whom they’d just added as named plaintiffs.
Want more On the Case? Listen to the On the Case podcast.
The substitution motion and an accompanying declaration from Anvari – a former associate at Latham & Watkins, Baker McKenzie and Perkins Coie who won the contest to serve as lead plaintiff because he allegedly lost nearly $270,000 in his Tezos investment – said only that Anvari believed he could not adequately represent all investors “based on various legal arguments which defendants intend to make.”
Those defense arguments, in a nutshell, are that Anvari’s own Internet history, in the form of pseudonymous posts on sites like Reddit and Autoadmit, precludes him from representing the class.
I’m going to explain, but first...