Back in 2004, 2005, and 2006, the former caretaker of this blog wrote about a practice known as "buried notice," and repeatedly wished (prayed?) that the practice would end.

Buried notice is how securities litigators describe the practice of "burying" the notice to class members of a new federal securities class action as required under the PSLRA, i.e., publishing it in a place that it is unlikely (or at least less likely) to be seen by class members.

It is a practice that has but two logical explanations:

1. The practitioners of this particular art form are attempting to keep the publicity surrounding their case to a minimum, in an effort to be appointed lead counsel.

2. The lawyer involved is not a member of the traditional plaintiffs' bar and is taking the notice statute ("shall cause to be published, in a widely circulated national business-oriented publication or wire service") at face value.

I am saddened to report that this practice is still alive and well.

Here is a scanned image of Page 18 of the November 23, 2007 issue of the Financial Times. Note at the bottom the "notice" regarding a new securities class action filed on behalf of purchasers of BP, p.l.c. securities.

The titan of the plaintiffs' bar that placed the ad and is going up against BP (market cap as of this afternoon - $218 Billion) - The Law Offices of William F. Salle.

Who?

This guy:

This is not the first time that Mr. Salle has published a notice in this manner.

And yet, he doesn't end up becoming lead counsel in this cases that he is theoretically "hiding" by burying them.

Also, he tends to file cases in the Central District of California, which PACER users may know as perhaps the slowest district court in the land to put complaints online or update their dockets, thus giving an additional advantage to any firm that can both bury a notice and file a case in that district.

Lastly, there is little, if any, valid reason to file a complaint against BP (a UK company) in the Central District of California. The far more obvious choices would be Alaska (where one of the defendants is headquartered) or New York (where the securities exchanges are located and the vast majority of non-US companies are sued for alleged securities law violations).

I am not a firm believer in coincidences.

In my humble opinion, Mr. Salle is acting in concert with another firm or firms who don't wish to sully their reputations by directly engaging in this practice themselves.

And because of this ridiculous refusal to follow the established practice of the remainder of the profession, I have to have members of my research team comb through, everyday, page by page, copies of Investors Business Daily, the Wall Street Journal, and the Financial Times, among other publications.

Buried notice practitioners - you have been warned.

Tuesday, October 17, 2006

Buried Notice Will Not Die

Let's put it this way. My company, ISS' Securities Class Action Services, has an entire business that focuses on researching and identifying new securities class actions. We have a team of people whose JOB is to research this stuff every day, 24X7. However, until today we did not have any record of a case filed October 2, 2006 against Forward Industries, which was the subject of a "notice" published to the class announcing the filing of the complaint. How is this possible?

Because the notice used was what many refer to as "buried notice," buried in the back pages of the Investors Business Daily. As I wrote almost two years ago,

Yes, the PSLRA does allow for notice by "widely circulated national business-oriented publication" or "wire service." As I have argued in the links above, however, (1) the industry standard in the year 2005 is to place such notices on a national business wire, and (2) there is no legitimate reason to deviate from this standard by providing "stealth" (but apparently legally adequate) notice through some random hard copy business publication such as IBD.

Two years later, this is even more true. Everyone who is interested in learning about securities class action filings monitors the wire services for announcements about such filings. No institutions or anyone else that I know of scans all of the "widely circulated national business-oriented publications" looking for random hardcopy announcements, nor should they be required to do so.

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Monday, January 31, 2005

Unburying Buried Notice

My hope that the year 2005 would bid good riddance to the practice of "buried notice" appears to have been overly optimistic judging by the recent decision in Marsden v. Select Medical Corp., 2005 WL 113128 (E.D. Pa.).  The decision, discussed by the Legal Intelligencer here, involves a notice that was challenged by defendants, who claimed that

the notice was of a "stealth character" because it was published "a random 17 days after the case was filed," and was "bur[ied]" in Investor's Business Daily rather than disseminated by a national wire service.

Defendants also argued that the notice was inadequate because it was a departure from the plaintiffs' law firm's "usual practice" of serving notice by news wire. The Court was unpersuaded in the least, ruling that "Defendants' position on this issue is utterly without merit. Investor's Business Daily is a nationally-circulated business-oriented publication catering to investors, and, as such, satisfies the publication requirement of § 78u-4(a)(3)(A)(i)." (citations to two cases from 1997 and 2000 omitted). The Court added that the sufficiency of notice under the PSLRA must be judged against the statutory requirements of the PSLRA rather than any particular law firm's typical practice.

Yes, the PSLRA does allow for notice by "widely circulated national business-oriented publication" or "wire service." As I have argued in the links above, however, (1) the industry standard in the year 2005 is to place such notices on a national business wire, and (2) there is no legitimate reason to deviate from this standard  by providing "stealth" (but apparently legally adequate) notice through some random hard copy business publication such as IBD.

UPDATE: A copy of the decision is available here.

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Monday, December 6, 2004

Uncovering "Buried Notice"

"Buried notice." That is the phrase many plaintiffs' securities class action lawyers use to describe the practice of "burying" the notice to class members of a new case required under the PSLRA , i.e., publishing it in a place that it is unlikely (or at least less likely) to be seen by class members.

The PSLRA requires that

"Not later than 20 days after the date on which the complaint is filed, the plaintiff or plaintiffs shall cause to be published, in a widely circulated national business-oriented publication or wire service, a notice advising members of the purported plaintiff class---

I. of the pendency of the action, the claims asserted therein, and the purported class period; and

II. that, not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class.  (Emphasis added).

Although the PSLRA provides this choice in the method of providing notice, in practice nearly all law firms today publish notice of a new case by issuing a press release over a national business wire such as PR Newswire or Business Wire. There are numerous reasons why these national wire services have become the de facto industry standard. First, they are less expensive, quicker and simpler than arranging for a notice to be printed in a hard copy publication. Second, such services are publicly available and searchable via internet sources such as Yahoo! and Google, thus offering maximum exposure. Third, it is obviously inefficient and unrealistic to flip through hard copies of random "business-oriented publications" on the hope that you might stumble upon notice of a class action in which you are interested.

Why then do some law firms opt only to publish the required notice in places like the back pages of the print edition of Investors Business Daily? This article by ISS's Ted Allen in the December 2004 SCAS Alert addresses that question.

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