What does it mean for an institutional investor to be a lead plaintiff in a class action?
Congress passed the PSLRA to encourage institutional investors to become involved in federal securities fraud class actions. Among other things, it requires notice to be disseminated once such a securities class action is filed to inform investors of the pendency of the lawsuit and of their entitlement, withing 60 days of the notice, to file a motion to be appointed lead plaintiff in the action. Under the PSLRA, the court is to appoint as lead plaintiff the member of the class “that the court determines to be the most capable of adequately representing the interests of class members.” By focusing on the class member with “the largest financial interest” in the relief being sought through the class action, Congress clearly was targeting institutional investors who would have the resources to oversee and administer a lawsuit in order to maximize the recovery for the class. In evaluating whether to seek to be appointed as a lead plaintiff in a securities fraud class action, the institutio
