City of Birmingham Retirement and Relief System v. Virtu Financial, Inc.
1:23-cv-08123
E.D.N.YNov 21, 2023Background
- Two securities class actions against Virtu Financial and executives (Hiebert v. Virtu, No. 23-CV-3770; City of Birmingham Retirement & Relief System v. Virtu, No. 23-CV-8123) allege violations of Section 10(b), Rule 10b-5 and Section 20(a) based on allegedly deficient information-access barriers that exposed customers’ confidential trading data.
- Plaintiffs contend Virtu made false/misleading public statements and omitted that controls (e.g., generic credentials, lack of monitoring, growing user access) were inadequate, leading to regulatory scrutiny and stock price declines following SEC disclosures and a Wells Notice.
- Hiebert complaint filed May 19, 2023 (class period March 1, 2019–April 28, 2023); Birmingham complaint filed Oct. 31, 2023 (class period Nov. 7, 2018–Sept. 12, 2023). Birmingham’s class period subsumes Hiebert’s.
- Multiple movants sought appointment as lead plaintiff; Birmingham moved to consolidate the actions, to be lead plaintiff, and to have Robbins Geller Rudman & Dowd LLP appointed lead counsel; competing movants either withdrew or filed non-opposition.
- The court consolidated the actions, appointed the Birmingham Retirement System as lead plaintiff (largest financial interest: >$500,000 estimated loss), approved Robbins Geller as lead counsel, and denied other movants’ motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Consolidation of Hiebert and Birmingham actions | Cases involve the same core factual allegations and legal claims; class periods largely overlap | (No opposition filed) | Actions consolidated under Fed. R. Civ. P. 42(a); Birmingham class period encompasses Hiebert’s so consolidation appropriate |
| Which movant is "most adequate plaintiff" under the PSLRA | Birmingham: timely motion, largest financial interest (>$500k losses), satisfies Rule 23 typicality and adequacy, selects experienced counsel | Other movants acknowledged smaller losses or withdrew | Birmingham appointed lead plaintiff under PSLRA presumption (largest financial interest; no rebuttal) |
| Lead counsel selection | Birmingham selected Robbins Geller, an experienced securities class-action firm | (No substantive opposition) | Court approves Robbins Geller as lead counsel; will defer to plaintiff’s choice absent conflict |
| Scope of consolidation and master docket procedures | Birmingham sought all related Virtu securities class actions consolidated and master file designation | (No opposition) | Court consolidated pending cases, set Hiebert docket as master file, directed administrative procedures for future related filings |
Key Cases Cited
- Olsen v. N.Y. Cmty. Bancorp, Inc., 233 F.R.D. 101 (E.D.N.Y.) (consolidation decision precedes lead-plaintiff appointment under PSLRA)
- Atanasio v. Tenaris S.A., 331 F.R.D. 21 (E.D.N.Y.) (consolidation of similar securities class actions appropriate)
- Somogyi v. Organogenesis Holdings Inc., 623 F. Supp. 3d 24 (E.D.N.Y.) (court must evaluate PSLRA factors even when motion unopposed)
- In re eSpeed, Inc. Sec. Litig., 232 F.R.D. 95 (S.D.N.Y.) (factors for assessing largest financial interest in lead-plaintiff selection)
- In re Flag Telecom Holdings, Ltd. Sec. Litig., 574 F.3d 29 (2d Cir.) (typicality requirement under Rule 23)
- Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52 (2d Cir.) (adequacy inquiry includes counsel competence and absence of antagonism)