In re Virtu Financial, Inc. Securities Litigation
1:23-cv-03770
E.D.N.YNov 21, 2023Background
- Two securities class actions (Hiebert and Birmingham) were filed against Virtu Financial and several executives alleging false/misleading statements and omissions about deficiencies in Virtu’s information-access barriers and controls.
- Complaints claim Virtu used a widely shared generic username/password, lacked monitoring of who accessed customer trading data, expanded simultaneous user access, and failed to prevent or detect misuse; these deficiencies allegedly led to SEC scrutiny, a Wells Notice, civil enforcement charges, and stock-price declines after disclosures.
- Hiebert was filed May 19, 2023 and triggered the PSLRA notice requirement; Birmingham filed Oct 31, 2023, then moved to consolidate the actions and to be appointed lead plaintiff and to approve Robbins Geller Rudman & Dowd LLP as lead counsel.
- Competing lead-plaintiff movants either withdrew or filed notices of non‑opposition; no party opposed consolidation.
- The court granted consolidation under Fed. R. Civ. P. 42(a), appointed the City of Birmingham Retirement and Relief System as lead plaintiff (finding it timely, having the largest financial interest, and preliminarily satisfying Rule 23), approved Robbins Geller as lead counsel, and denied other movants’ requests.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Consolidation of Hiebert and Birmingham actions | Actions involve common questions of law/fact (same defendants, same core allegations); overlapping class periods; no prejudice | No opposition | Consolidation granted under Fed. R. Civ. P. 42(a) because claims substantially similar and no prejudice |
| Timeliness / PSLRA notice response | Birmingham timely moved following PRNewswire notice and within PSLRA window | No opposition | Timely motion; meets PSLRA procedural requirement for lead plaintiff consideration |
| Largest financial interest (PSLRA factor) | Birmingham suffered >$500,000 in estimated losses—largest of movants | Competing movants conceded smaller losses or withdrew | Birmingham has the largest financial interest and is presumptively the most adequate plaintiff |
| Rule 23 typicality/adequacy and lead counsel approval | Birmingham’s claims typical of class; interests non‑antagonistic; Robbins Geller experienced and qualified | No objection | Preliminary Rule 23 typicality and adequacy satisfied; court defers to plaintiff’s choice and approves Robbins Geller as lead counsel |
Key Cases Cited
- Olsen v. N.Y. Cmty. Bancorp, Inc., 233 F.R.D. 101 (E.D.N.Y. 2005) (court must decide consolidation before lead‑plaintiff appointment under the PSLRA)
- Atanasio v. Tenaris S.A., 331 F.R.D. 21 (E.D.N.Y. 2019) (consolidation appropriate where actions share common questions of law and fact)
- In re eSpeed, Inc. Sec. Litig., 232 F.R.D. 95 (S.D.N.Y. 2005) (framework for evaluating largest financial interest under PSLRA)
- In re Flag Telecom Holdings, Ltd. Sec. Litig., 574 F.3d 29 (2d Cir. 2009) (typicality standard under Rule 23 in securities class actions)
- Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52 (2d Cir. 2000) (standards for adequacy of class representative and counsel)
- Somogyi v. Organogenesis Holdings Inc., 623 F. Supp. 3d 24 (E.D.N.Y. 2022) (even unopposed lead‑plaintiff motions require PSLRA and Rule 23 analysis)