In Re Network Associates, Inc. Securities Litig.

MEMORANDUM OPINION

APPOINTING LEAD PLAINTIFF (AMENDED)

INTRODUCTION

For two-thirds of a century, the federal securities laws have protected the integrity of the capital markets in America, in part through the policing effect of private securities class actions. Due to perceived abuses in such litigation, however, Congress enacted the Private Securities Litigation Reform Act of 1995 (“PSLRA”). One of its central provisions calls for the district court to appoint a “lead plaintiff’ in such cases. This provision, and its proper application, are at issue in three competing motions for such appointment in this case. One of the pivotal legal issues is whether a “group” of unrelated investors with no decisionmaking structure and no connection other than counsel can qualify as a candidate for lead plaintiff under the PSLRA. For the reasons set forth below, the Court holds that such artificial “groups” may not so qualify.

STATEMENT

This set of consolidated actions arose out of a series of declines in the price of the common stock of Network Associates, Inc., earlier this year. The complaints allege accounting fraud and insider trading. The fraud supposedly began in January 1998 and…