In Re Seagate Technology II Securities Litigation

ORDER

The complaints in these consolidated securities fraud cases allege that due to improper conduct by the defendants, the price of Sea-gate common stock was fraudulently inflated for a period of several months. During this time, defendants allegedly made several partially curative disclosures. These partial disclosures caused the trading price of the stock to decline gradually, instead of dropping suddenly as is usually the ease when a one-time full disclosure of fraud is released. As a result, some of those purchasing stock during this period also sold some or all of their shares at prices reflecting these partial disclosures.

As will be developed here, these purchasers have very different stakes in shaping the pertinent evidence from those purchasers who held their stock until after the fraud had been fully revealed. These divergent interests, which stem primarily from the measure of damages currently in use in fraud-on-the-market cases, may be so pervasive that the interests of the class members are not sufficiently aligned to satisfy the prerequisites of FRCP 23 and fundamental due process requirements. Accordingly, this litigation may be precluded from proceeding as a…