Under the Private Securities Litigation Reform Act of 1995, a plaintiff who files a securities class action must publish a notice of that action alerting other purported class members that the class action is pending and that any member of the purported class may seek appointment as “Lead Plaintiff.” Such motion must be filed no later than 60 days after the notice is published.
After the 60-day deadline, the court decides which applicant is the most capable of adequately representing the interests of class members and appoints that person or entity as Lead Plaintiff. In determining who should be appointed Lead Plaintiff, the court will consider, among other things, which applicant has the largest financial interest in the case. What constitutes a significant financial interest varies case-by-case. In some cases, court-appointed Lead Plaintiffs have sustained millions of dollars in losses while in some smaller cases, court-appointed Lead Plaintiffs have sustained losses in the tens of thousands of dollars.