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A group of pension funds loses its offer to lead the Green Dot dispute

By August 9, 2021August 25th, 2021Pension funds

  • Judge says funds with smaller losses can’t beat larger shareholder
  • Appoint a New York fund to take the case against a FinTech company

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(Reuters) – A California federal judge has rejected an offer by three pension funds to partner up and lead a shareholder dispute against fintech company Green Dot Corp, dismissing the idea that small investors could unite their forces to overcome a bigger one.

Instead, U.S. District Judge Dean Pregerson in Los Angeles ruled on Friday that a New York pension fund should take the reins in the proposed class action lawsuit alleging that the prepaid debit card company misled investors about its 2018 revenue and growth prospects. The company has yet to respond to the complaint.

The New York Hotel Trades Council & Hotel Association of New York City Inc pension fund alleges it lost $ 663,000 on its Green Dot holdings.

The Massachusetts and Pennsylvania pension fund group claimed losses totaling $ 1.1 million.

Lawyers for Berman Tabacco and Labaton Sucharow, who represent the group, and Robbins Geller Rudman & Dowd, who represent the New York fund, did not immediately respond to requests for comment on Monday.

Under the Private Securities Litigation Reform Act, the principal plaintiff is presumed to be the investor, or group of investors, with the largest loss which is otherwise typical and adequate to represent the class.

The lead role involves a potentially lucrative senior advisor appointment for investor lawyers.

In rejecting the group’s offer to conduct the case, Pregerson acknowledged that judges appointed groups of investors in some cases where the offer was not contested or the group contained an investor who claimed to have lost more than any individual candidate.

But the judge said there was no precedent for a group of independent investors to come together to create the greatest financial interest in a case where the group members individually lost less than other suitors.

The 9th U.S. Court of Appeals recently overturned an Arizona judge’s ruling denying a group of investors the lead role. In this case, two of the group’s individual investors had alleged losses greater than any other candidate.

The case is Koffsmon v. Green Dot Corporation et al., US District Court, Central District of California, No. 19-10701.

For the group of investors: Nicole Lavallee, Joseph Tabacco Jr and Jeffrey Rocha of Berman Tabacco and Christopher Keller, Eric Belfi and Francis McConville of Labaton Sucharow.

For the New York fund: Danielle Myers, Tricia McCormick and Juan Carlos Sanchez of Robbins Geller Rudman & Dowd.

Read more:

Nikola’s investors get second chance for lead role in lawsuit

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