The opinion of the court was delivered by: Andrew J. Peck, United States Magistrate Judge
Plaintiff Bert Vladimir and class member Gary Thesling ("the Thesling movants") moved pursuant to the Private Securities Litigation Reform Act (the "PSLRA"), 15 U.S.C. § 78u-4, for (a) appointment as co-lead plaintiffs of a class of sellers of the securities of Bioenvision, Inc. ("BIVN"), (b) approval of their selection of Squitieri & Fearon, LLP ("Squitieri") as lead counsel for the class, and (c) appointment of Squitieri as lead counsel. (Dkt. No. 11: Thesling Notice of Mot.) The parties have consented to my decision of the motions pursuant to 28 U.S.C. § 636(c). (Dkt. No. 35.) For the reasons set forth below, the Thesling movant's motion is GRANTED. (See also Dkt. No. 42: 11/2/07 Peck Order.)*fn1 The similar motion (Dkt. No. 14) filed by Stull, Stull & Brody to appoint class member Donald Johnson as lead plaintiff is DENIED.
Vladimir, a pre-existing Squitieri client, contacted the Squitieri firm concerning BIVN. (Dkt. No. 23: 9/25/07 Squitieri Aff. ¶ 3.) Vladimir filed suit on July 13, 2007 under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and SEC Rule 10b-5 on behalf of himself and all others who sold BIVN securities from May 1, 2007 through May 28, 2007 inclusively (the "class period"). (See Dkt. No. 1: Compl. ¶¶ 2, 9-14.)*fn2 Defendant BIVN is a Delaware corporation with its corporate headquarters in New York City. (Compl. ¶ 6.) During the proposed class period, BIVN was a "biopharmaceutical company primarily focused upon the acquisition, development and marketing of compunds and technologies for the treatment of cancer, autoimmune disease and infection." (Compl. ¶ 6.)
On May 29, 2007, BIVN announced that it had entered into a definitive agreement and plan of merger with Genzyme, whereby Genzyme [would] commence a tender offer to acquire all of BIVN's outstanding shares of common stock . . . . BIVN and defendants had known that such a transaction had been planned and negotiated for at least a month before it was announced. Thus, defendants were under a duty to correct the statements made prior to May 1, 2007, described [in the complaint] which were still alive and influencing the price of BIVN stock in the market and were under a duty to make all their statements and announcements on and after May 1, 2007 truthful, complete and accurate and to ensure that all statements contained all material facts necessary in order to make statements not materially misleading. Defendants intentionally failed to update or correct previous statements regarding the Company's business plans and "primary focus" and continually misrepresented the fact that "its primary focus" was no longer the development and marketing of cancer treatments but, instead the primary focus of BIVN and the individual defendants was to find a merger partner and to consummate a takeover of BIVN. . . . [Those] material omissions and misrepresentations had the effect of artificially deflating the price of BIVN's securities . . . [which] resulted in plaintiff and other members of the Class selling BIVN securities at prices significantly below the actual value of those securities. (Compl. ¶¶ 23-26.) Specifically, the complaint asserts claims for: (1) violation of Exchange Act Section 10(b) and Rule 10b-5 against all defendants (Compl. ¶¶ 29-35); and (2) violation of Exchange Act Section 20(a) against the individual defendants (Compl. ¶¶ 36-38).
Vladimir certified that he sold a total of 1,000 shares during the class period, and that he was willing to serve as lead plaintiff. (Dkt. No. 12: 9/11/07 Squitieri Aff. Ex. C: 7/13/07 Vladimir Certification; Dkt. No. 8: 7/26/07 Vladimir Rev. Cert.) Squitieri calculated Vladimir's losses as $2,330.*fn3 (9/11/07 Squitieri Aff. Ex. E: Table of Losses.)
Also on July 13, 2007, Vladimir, through his counsel Squitieri, caused the requisite PSLRA notice of the action to be published on PrimeNewswire. (Dkt. No. 12: 9/11/07 Squitieri Aff. Ex. B: PSLRA Notice.) Thesling contacted Squitieri and "agreed to join this action and serve as a representative of the class and to stand for appointment as a proposed lead plaintiff together with Vladimir, but alone if necessary." (9/25/07 Squitieri Aff. ¶ 4.)
On September 11, 2007, the Thesling movants filed their lead plaintiff motion, pursuant to the requirements set forth in the PSLRA, seeking: (1) appointment of the Thesling movants as co-lead plaintiffs, (2) approval of the Thesling movants' selection of Squitieri as lead counsel for the class, and (3) appointment of Squitieri as lead counsel. (Dkt. No. 11: Thesling Notice of Mot.; see also Dkt. Nos. 12-13.) Thesling certified that he sold a total of 46,300 shares during the class period (24,300 of which traded through his 401K account), and that he was willing to serve as lead plaintiff. (9/11/07 Squitieri Aff. Ex. D: 7/19/07 Thesling Cert.; 9/25/07 Squitieri Aff. Ex. A: 9/21/07 Thesling Cert.; Dkt. No. 41: 10/15/07 Thesling Rev. Cert.) Squitieri calculated Thesling's losses as $97,625. (9/11/07 Squitieri Aff. Ex. E: Table of Losses.)
On July 17, 2007, Stull, Stull & Brody ("Stull") published their own notice of Vladimir's action, listing the Stull firm as a contact. (See Dkt. No. 29: 10/2/07 Squitieri Aff. Ex. B: Stull Notice; see also Stull website, http://www.secfraud.com/filedcases/bioenvision.html.) On September 11, 2007, Stull submitted a motion on Johnson's behalf seeking: (1) appointment of Johnson as lead plaintiff, (2) approval of Johnson's selection of Stull as lead counsel for the class, and (3) appointment of Stull as lead counsel. (Dkt. No. 14: Johnson Notice of Mot.; see also Dkt. Nos. 15-16.) Johnson certified that he sold a total of 9,300 shares during the class period and that he was willing to serve as lead plaintiff. (Dkt. No. 16: 9/11/07 D'Agnenica Aff. Ex. B: Johnson Cert.) Stull calculated Johnson's losses as $21,483.*fn4 (9/11/07 D'Agnenica Aff. Ex. C: Johnson Transaction Rpt.)
Motions for appointment of lead plaintiff and approval of lead counsel are governed by the PSLRA, which applies to "each private action arising under the [Securities Exchange Act] that is brought as a plaintiff class action pursuant to the Federal Rules of Civil Procedure." 15 U.S.C. § 78u-4(a)(1).
[T]he court shall consider any motion made by a purported class member in response to the notice, including any motion by a class member who is not individually named as a plaintiff in the complaint or complaints, and shall appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members (hereafter in this paragraph referred to as the "most adequate plaintiff") in accordance with this subparagraph. 15 U.S.C. § 78u-4(a)(3)(B)(i). The PSLRA provides a rebuttable presumption in favor of the class member with the "largest financial interest." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(bb).*fn5 The PSLRA further provides that: "The most adequate plaintiff shall, subject to the approval of the court, select and retain counsel to represent the class." 15 U.S.C. § 78u-4(a)(3)(B)(v).
"Prior to the enactment of the PSLRA, lead plaintiff status in securities class actions was generally determined by which party first filed suit. This rule invariably resulted in a 'race to the courthouse' in an effort by counsel to gain lead plaintiff status for their client." In re Bausch & Lomb Inc. Sec. Litig., 244 F.R.D. 169, 171 (W.D.N.Y. 2007); see also, e.g., In re Olsten Corp. Sec. Litig., 3 F. Supp. 2d 286, 294 (E.D.N.Y. 1998). "Recognizing that the selection of the lead representative party should rest on considerations other than speed, Congress enacted the PSLRA in order to 'increase the likelihood that parties with significant holdings in issuers, whose interests are more strongly aligned with the class of shareholders, will participate in the litigation and exercise control over the selection and actions of plaintiff's counsel.'" In re Bausch & Lomb Inc. Sec. Litig., 244 F.R.D. at 171 (quoting legislative history).*fn6 Congress decided that the PSLRA's objectives are best achieved when lead plaintiffs are institutional investors or others with large holdings at stake whose interests will be most strongly aligned with those of the class members. See, e.g., Bhojwani v. Pistiolis, 06 Civ. 13761, 2007 WL 2197836 at *6 (S.D.N.Y. June 26, 2007); Vanamringe v. Royal Group Tech. Ltd., 237 F.R.D. at 57; Weiss v. Friedman, Billings, Ramsey Group, Inc., 2006 WL 197036 at *2; Bassin v. deCODE Genetics, Inc., 230 F.R.D. 313, 315-16 (S.D.N.Y. 2005); Sofran v. LaBranche & Co., 220 F.R.D. 398, 403 (S.D.N.Y. 2004); In re Oxford Health Plans, Inc. Sec. Litig., 182 F.R.D. at 46.
I. THE NOTICE AND TIMELY MOTION REQUIREMENTS ARE SATISFIED
Under the PSLRA, the plaintiff who files the initial action must, within twenty days of filing the complaint, publish a notice in a "widely circulated national business-oriented publication or wire service," informing class members of the pendency of the action and their right to file a motion for appointment as lead plaintiff. 15 U.S.C. §78u-4(a)(3)(A)(i). Squitieri, on behalf of Vladimir, caused notice to be published on PrimeNewswire on July 13, 2007, the same day they filed the complaint. (See pages 2-3 above.) PrimeNewswire has previously been held to be an acceptable national business-oriented wire service that constitutes a suitable vehicle for meeting the PSLRA notice requirement. See, e.g., Jolly Roger Offshore Fund LTD v. BKF Capital Group, Inc., 07 Civ. 3923, 2007 WL 2363610 at *2 (S.D.N.Y. Aug. 16, 2007) ("PrimeNewswire is a suitable vehicle for meeting the statutory requirement that notice be published."). No challenges to the adequacy of the July 13, 2007 notice were raised by Stull or defendants. The PSLRA's notice requirement is satisfied.
Within sixty days "after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class." 15 U.S.C. § 78u-4(a)(3)(A)(i)(II). The Thesling movants and ...