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What is the "Lead Plaintiff Deadline" in a class action lawsuit?

UPDATED: December 3, 2010

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Timing can play a very important role in a securities fraud case. The Lead Plaintiff Deadline (LPD) is a sixty day period after a securities class action suit has been filed, within which applications for lead plaintiff must be filed.

What is a lead plaintiff?

The lead plaintiff is a court-appointed representative for absent class members.

How are lead plaintiffs selected during the period mentioned above?

If you wish to be a lead plaintiff in a particular case, you must be able to demonstrate that as a plaintiff in the litigation, you have the “largest financial interest” (typically stated by court order as a minimum amount). This must be accomplished within the 60-day filing period. "The lead plaintiff determination does not depend on the court's judgment of which party would be best lead plaintiff for the class, but rather which candidate fulfills the requirements of the Act." (PSLRA Opinion, Schindlin, J.) July 13, 2005, at 2005 U.S. Dist.). 

Is it difficult to become the lead plaintiff in a class action lawsuit?

Increasingly, the role has become more important, and therefore may result in a heated contest between plaintiffs. Calculating losses can present a challenge, and being named as lead plaintiff suggests a defining role in the recovery of damages. Since the process of filing for lead plaintiff can be time consuming, many attorneys refuse to take a request to beat the LPD within five days of the deadline.

How can becoming the lead plaintiff affect recovery?

Two competing principles emerge:  LIFO (last in, first out) versus FIFO (first in, first out). Both are designed to define the leading plaintiff as the person with the greatest financial loss. This can assure that the maximum accurate claim against a defendant drives the case, to the benefit of absent plaintiffs. 

I missed the 60-day deadline. Do I still have an opportunity to file?  

Most attorneys who practice in the area state that the rule is “strictly applied”, but there are exceptions. On occasion, no plaintiff comes forward or satisfies the requirements of minimum alleged harm. The court will issue a second request for lead plaintiff, but in this case the new deadline may be less than the original 60 days (usually thirty days).

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