Does An Asset Manager Have Standing Under The Federal Securities Laws?
By: Brian P. Murray In 1995, amidst much fanfare and after millions of dollars in campaign contributions, Congress enacted the first substantive amendments to the two cornerstone acts of the federal securities laws since they were passed in the 1930s. Entitled the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), one of its purposes is to attract large investors to serve as class representative and fill the newly created position of “lead plaintiff,” whose job it is to choose lead counsel and fulfill the other responsibilities of a class representative. The theory behind the lead plaintiff provision is that a plaintiff with a greater economic stake in the litigation would more effectively monitor and control lead counsel. What was left unclear in the PSLRA was exactly who would qualify as the large-investor plaintiff. Many people, and institutions, delegate responsibility for managing their money to asset managers or investment advisors. While title to the account remains
