What Types of Institutional Investors Qualify as Lead Plaintiffs?

Most institutional investors can qualify as lead plaintiffs, including state and municipal retirement systems, Police & Firefighters’ pension plans, Taft-Hartley funds, and private and foreign funds.

Every year, over 100 securities fraud class actions are filed, seeking to recover billions of dollars in damages.  Many of these cases are led by municipal or state retirement systems.  Our monitoring services are designed to assist public plan trustees fulfill their fiduciary duties.  For example, in Florida, public plan trustees are governed by Part VII, Chapter 112, Florida Statutes, entitled, “The Florida Protection of Public Employees Retirement Benefits Act”, which provides in part that retirement systems should be “managed, administered, operated and funded in such a manner as to maximize the protection of public employee retirement benefits.”

When advising our public plan clients in Florida on seeking lead plaintiff status, we carefully consider whether such involvement will maximize a plan’s assets, or whether it would be advisable for the fund to take a less active role.  We work with our public fund clients nationwide to ensure that they are receiving the information they need to fulfill their fiduciary obligations under governing laws.

In addition to providing monitoring and litigation services to many public pension funds, Saxena White is proud to represent numerous Taft-Hartley funds, including national and local funds, across the country.  These funds are increasingly coming forward to act as lead plaintiffs. For Taft-Hartley funds governed by the Employee Retirement Income Security Act (“ERISA”), the Department of Labor has provided explicit instructions for considering acting as lead plaintiff.  In a brief filed by the Secretary of Labor in Bragdon v. Telxon Corporation, No. 98-CV-2876 (N.D. Ohio), it was explained that:

Not only is a fiduciary not prohibited from serving as a lead plaintiff, the Secretary believes that a fiduciary has an affirmative duty to determine whether it would be in the interest of the plan participants to do so. . . [It] may not only be prudent to initiate litigation, but also a breach of a fiduciary’s duty not to pursue a valid claim. . . This position arises out of ERISA’s prudence requirement, which encompasses several narrower duties which have evolved under the law of trusts, including the duty to take reasonable steps to realize on claims held in trust.

We provide our Taft-Hartley clients with detailed case reports which provide recommendations as to whether or not the fund should seek lead plaintiff status, so the fund can ensure its file is properly documented to comply with the Department of Labor’s guidance on securities litigation best practices.