Earlier this year, Judge Amy J. St. Eve (N.D. Ill.) blocked Plaintiffs in the Whitehall securities class action from challenging false statements made after the Lead Plaintiff's last purchase of the stock. Basically, the court ruled that because Greater Pennsylvania Carpenters Pension Fund’s last sale occurred 18 months before the end of the class period, they could not have been misled by any statements after that date. Despite this, Judge St. Eve allowed Plaintiffs to file an amended complaint to fix the standing issue.
Instead of attempting to add another Lead Plaintiff, Plaintiffs simply added an individual (one Mr. Milton Pfeiffer) as a "representative party" in their new complaint. Mr. Pfeiffer purchased his five shares after all of the false statements had been issued. But Defendants balked, arguing that Pfeiffer, who was one of the original named Plaintiffs, failed to submit a new sworn certification, and did not otherwise meet the requirements of Rule 23. The judge agreed with Defendants that Pfeiffer's certification was flawed in that it did not inform the court whether Pfeiffer has ever "sought to serve as a representative on behalf of a class." However, the court gave Plaintiffs 20 days to fix this problem by filing an amended certification. Here we go again.
Defendants also argued that since Pfeiffer has filed nine securities class actions in the past three years, and since he only purchased five shares of Whitehall stock for $53.80 (sounds like a very careful investor), that he is inadequate to serve as a class representative. But Judge St. Eve rejected that argument, noting that the PSLRA "does not provide a vehicle for the court to address his adequacy at this stage of the litigation."
Finally, our old friend Dura popped up again, and followed the emerging trend of, well, not changing anything very much. The judge quickly disposed of Defendants' argument that Dura should alter her January 2005 decision on their motions to dismiss, recognizing that "Plaintiff has alleged more than simply inflation of the purchase price."
You can read the decision, issued June 30, 2005, at 2005 U.S. Dist. LEXIS 12971.
Nugget: “Once a potential representative party complies with the PSLRA's certification requirements, the Court must wait to address class representative issues under Rule 23's standards. The PSLRA does not alter Rule 23.”