## Facts

- Purchasers of FTP Software, Inc. stock during July 14, 1995 to January 3, 1996 alleged violations of Exchange Act §§ 10(b) and 20(a) against the company and certain officers.
- The action was filed in March 1996 and proceeded under the Private Securities Litigation Reform Act of 1995 (PSLRA), which requires early notice to class members and sworn plaintiff certifications.
- The named plaintiff transmitted notice of the filing through Business Wire within the PSLRA’s 20-day period; the notice was further disseminated by major news outlets, including Bloomberg, the Wall Street Journal, the Boston Globe, and Dow Jones.
- The named plaintiff and two additional investors moved to be appointed lead plaintiffs and sought appointment of their selected lead counsel.
- Defendants opposed the motion, arguing (i) plaintiffs failed to satisfy PSLRA certification requirements, (ii) the notice was not published in a qualifying national business-oriented outlet or wire service, and (iii) lead-plaintiff appointment was premature or unsupported.

## Issues

1. Whether defendants may challenge compliance with the PSLRA’s procedural requirements governing notice, certifications, and lead-plaintiff/lead-counsel appointment.
2. Whether the movants satisfied the PSLRA’s requirement that plaintiffs file sworn certifications with the complaint describing their securities transactions and prior securities-class-action participation.
3. Whether dissemination of notice through Business Wire (and subsequent republication by national business media) satisfied the PSLRA requirement of publication in a widely circulated national business-oriented publication or wire service.
4. Whether the movants qualified as the “most adequate plaintiff” under the PSLRA and whether their selection of lead counsel should be approved.

## Decision

- The court held that defendants have standing to contest compliance with the PSLRA’s procedural requirements relevant to lead-plaintiff and lead-counsel appointment.
- The court found the movants’ sworn submissions sufficient to meet the PSLRA certification requirement and declined to disqualify them for asserted technical defects.
- The court held the notice requirement was satisfied because publication through Business Wire, coupled with broad dissemination through recognized national business news channels, met the statute’s purpose and terms.
- The court appointed the movants as lead plaintiffs and approved their selected firm as lead counsel.

## Legal Principles

- Defendants may be heard to challenge whether the PSLRA’s notice, certification, and lead-plaintiff provisions have been satisfied; adversarial testing supports enforcement of the statute’s procedural controls.
- The PSLRA requires a sworn plaintiff certification filed with the complaint describing the plaintiff’s transactions in the security and prior participation as a plaintiff in securities class actions; the requirement functions to deter figurehead plaintiffs and ensure a real financial stake.
- PSLRA notice is adequate when published within the statutory time and disseminated through a widely circulated national business-oriented publication or wire service in a manner reasonably calculated to inform potential class members of their right to seek lead-plaintiff status.
- The “most adequate plaintiff” framework presumes appointment of the investor (or group) with the largest financial interest who also satisfies Rule 23 typicality and adequacy; absent stronger competing motions, qualified movants should be appointed.
- Lead plaintiffs select and retain lead counsel subject to court approval; absent a concrete showing of conflict or inadequacy, the court generally defers to the lead plaintiffs’ choice.

## Conclusion

The court applied the PSLRA’s early procedural reforms by permitting defendant challenges to compliance, found that the plaintiffs substantially met the statute’s certification and notice requirements, and appointed the moving investors as lead plaintiffs while approving their chosen lead counsel.


Greebel v. FTP Software, Inc., 939 F. Supp. 57 (D. Mass. 1996)