The U.S. District Court for the District of Connecticut has rejected defendants Stewardship Investment Advisors LLC and Marlon Quan’s challenge to the appointment of Poptech LP as the lead plaintiff in a class securities fraud lawsuit filed by investors. The plaintiffs are accusing the investment firm and Quan of violating federal securities law antifraud proscriptions by allegedly misrepresenting that the fund would employ certain investment strategies. The fund is also accused of investing the majority of its assets in a Thomas Petters-operated Ponzi scam. Poptech, not long after filing its class securities lawsuit, published notice in Business Wire stating that there wasn’t a dispute that the notice appropriately notified members of the proposed class about the pending action and the purported class period.
In their challenge, the defendants argued that the notice did not satisfy Private Securities Litigation Reform Act requirements, including failing to completely and “adequately” notify proposed class members of all the claims asserted in the complaint, not providing enough details about the defendants’ alleged misrepresentations, and failing to “adequately facilitate” additional action and inquiry by potential members. The court, however, found that the PSLRA requires just a “reasonably detailed summary” of claims made.
Shepherd Smith Edwards & Kantas LTD LLP Founder and Securities Fraud Lawyer William Shepherd had this to say about the ruling: “If this Court’s decision survives appeal, it could be helpful to victims of securities fraud. Some courts have carried ‘pleading securities fraud with particularity’ to extremes before discovery could even begin. Also, while these pleading requirements apply to class action litigation, many judges have been requiring absurd pleading requirements in all types of securities actions. Hopefully, fewer defrauded investors will be thrown out of court in the future based on pleading technicalities.”