Water Island Event-Driven Fund v. MaxLinear, Inc.

— 1 — — 2 — — 3 — — 4 — — 5 — — 6 — — 7 — 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA — 10 — 11 WATER ISLAND EVENT-DRIVEN Case No.: 23-cv-1607-LAB-VET FUND, on behalf of itself and all — 12 — others similarly situated, ORDER APPOINTING LEAD 13 PLAINTIFF AND APPROVING Plaintiff, SELECTION OF LEAD — 14 — v. COUNSEL [Dkt. 14, 15] — 15 — MAXLINEAR, INC.; et al., — 16 — Defendants. — 17 — 18 On August 31, 2023, Water Island Event-Driven Fund (“Water Island”) filed 19 a putative class action lawsuit alleging violations of §§ 10(b) and 20(a) of the 20 Securities Exchange Act of 1934 (“Exchange Act”) and Securities Exchange 21 Commission Rule 10b-5. (Dkt. 1, Compl.). This action was brought on behalf of 22 purchasers of Silicon Motion Technology Corporation’s (“SIMO”) American 23 Depositary Shares (“ADS”) from June 6, 2023 through July 26, 2023 (the “Class 24 Period”), against Maxlinear, Inc. and two executive officers: (1) Chairman, 25 President, and Chief Executive Officer Kishore Seendripu and (2) Chief Financial 26 Officer and Chief Corporate Strategy Officer Steven Litchfield (collectively, 27 “Defendants”). (Id.). Before the Court are two competing motions to appoint Lead 28 Plaintiff and approve the selection of Lead Counsel. (Dkt. 14, 15). Movants HBK 1 Master Fund L.P. and HBK Merger Strategies Master Fund L.P. (collectively, 2 “HBK”) and movants Westchester Funds1; Alpine Funds2; Atlas Fund3; and Kryger 3 Funds4 (collectively, the “Institutional Investors”) allege that they should be named 4 Lead Plaintiff and the Court should appoint their choice of counsel.5 Having 5 considered the parties’ briefing, the Court finds the motions suitable for resolution 6 without oral argument. The hearing set for January 8, 2024, at 11:15 a.m., in 7 Courtroom 14A is VACATED pursuant to Civil Local Rule 7.1(d)(1). The Court 8 GRANTS the Institutional Investors’ motion for Appointment of Lead Plaintiff and 9 Selection of Lead Counsel, (Dkt. 15), and DENIES HBK’s competing motion, 10 (Dkt. 14). 11 // 12 // — 13 — — 14 — 15 1 The Westchester Funds consists of six related private investment funds: (1) JNL/Westchester Capital Event Driven Fund; (2) The Merger Fund®; (3) The — 16 — Merger Fund® VL; (4) Virtus Westchester Event-Driven Fund, a series of Virtus 17 Event Opportunities Trust; (5) Westchester Capital Master Trust; and (6) The Westchester Merger Arbitrage Strategy Sleeve of the JNL Multi-Manager — 18 — Alternative Fund. 19 2 The Alpine Funds consists of nine related private investment funds: (1) Alpine Associates, A Limited Partnership; (2) Alpine Dedicated, L.P.; (3) Alpine Heritage — 20 — II, L.P.; (4) Alpine Heritage Japan Trust; (5) Alpine Heritage Offshore Fund Ltd.; 21 (6) Alpine Heritage, L.P.; (7) Alpine Institutional, L.P.; (8) Alpine Merger Growth, L.P.; and (9) Alpine Partners, L.P. 22 3 The Atlas Fund is Atlas Diversified Master Fund, Ltd. 23 4 The Kryger Funds consists of two related private investment funds: (1) Kryger Capital Ltd. – Event Fund and (2) Kryger Capital Ltd. – Enhanced Fund. 24 5 Water Island doesn’t appear to still seek appointment as Lead Plaintiff because 25 it supports the Institutional Investors’ motion for appointment as Lead Plaintiff. (Dkt. 44 at 7 n.11). The Court also finds that Water Island doesn’t have the — 26 — largest financial interest compared to HBK and the Institutional Investors. 15 27 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(bb). The Court DENIES Water Island’s request to be designated as Lead Plaintiff as requested in the Complaint and will focus its — 28 — 1 I. ANALYSIS 2 A. Motion to Appoint Lead Plaintiff 3 The Private Securities Litigation Reform Act of 1995 (“PSLRA”) dictates the 4 process for determining lead plaintiff in a securities class action brought under the 5 Exchange Act as well as the Securities Act of 1933. 15 U.S.C. § 78u-4(a)(3)(B); 6 15 U.S.C. § 77z-1(a)(3)(B); In re Cavanaugh, 306 F.3d 726 , 729 (9th Cir. 2002). 7 The district court “shall appoint as lead plaintiff the member or members of the 8 purported class that the court determines to be the most capable of adequately 9 representing the interest of the class members.” 15 U.S.C. § 78u-4(a)(3)(B)(i). “[A] 10 ‘group of persons’ can collectively serve as a lead plaintiff.” In re Cavanaugh, 306 11 F.3d at 731 n.8. The PSLRA creates a rebuttable presumption that the most 12 adequate plaintiff is the “person or group of persons” that meet the following three 13 requirements: (1) has filed the complaint or brought the motion for appointment of 14 lead counsel in response to the publication of notice, (2) has the “largest financial 15 interest” in the relief sought by the class, and (3) otherwise satisfies the 16 requirements of Federal Rule of Civil Procedure 23. 15 U.S.C. § 78u17 4(a)(3)(B)(iii)(I)(aa)–(cc). The presumption may be rebutted only upon proof that 18 the presumptive lead plaintiff: (1) “will not fairly and adequately protect the interests 19 of the class” or (2) “is subject to unique defenses that render such plaintiff 20 incapable of adequately representing the class.” Id. § 78u-4(a)(3)(B)(iii)(II)(aa)– 21 (bb). 22 By its terms, the PSLRA “provides a simple three-step process for identifying 23 the lead plaintiff” in a private securities class action litigation. In re Cavanaugh, 306 24 F.3d at 729. “The first step consists of publicizing the pendency of the action, the 25 claims made and the purported class period.” Id. At the second step, “the district 26 court must consider the losses allegedly suffered by the various plaintiffs,” and 27 select as the “presumptively most adequate plaintiff . . . the one who has the largest 28 financial interest in the relief sought by the class and otherwise satisfied the 1 requirements of Rule 23 of the Federal Rules of Civil Procedure.” Id. at 729–30 2 (internal quotations omitted). “[T]he only basis on which a court may compare 3 plaintiffs competing to serve as lead is the size of their financial stake in the 4 controversy.” Id. at 732 (emphasis in original). Once the individual or group with 5 the largest financial interest is identified, the court “must then focus its attention on 6 that plaintiff” and determine whether they meet the requirements of Rule 23. Id. at 7 730 (emphasis in original). If the individual or group with the highest financial stake 8 in the litigation does meet the requirements of Rule 23, they must be the 9 presumptive lead plaintiff. Id. Finally, at the third step, the district court “give[s] 10 other plaintiffs an opportunity to rebut the presumptive lead plaintiff’s showing that 11 it satisfies Rule 23’s typicality and adequacy requirements.” Id. If the court 12 determines that the presumptive lead plaintiff doesn’t meet the typicality or 13 adequacy requirement, then it must return to step two, select a new presumptive 14 lead plaintiff, and again allow the other plaintiffs to rebut the new presumptive lead 15 plaintiff’s showing. Id. at 731. 16 1. Notice and Procedural Requirements 17 Pursuant to the PSLRA, a plaintiff who files a securities class action litigation 18 must provide notice to class members via publication in a widely-circulated national 19 business-oriented publication or wire service within twenty days of filing the 20 complaint. 15 U.S.C. § 78u-4(a)(3)(A)(i). The notice must: (1) advise class 21 members of the pendency of the action, the claims asserted therein, and the 22 purported class period; and (2) inform potential class members that, within sixty 23 days of the date on which notice was published, any members of the purported 24 class may move the court to serve as lead plaintiff in the purported class. Id. § 78u25 4(a)(3)(A)(i)(I)–(II). In order to be considered for lead plaintiff status, each 26 proposed lead plaintiff must, within sixty days of published notice of the pendency 27 of the action, move to be appointed lead plaintiff. See id. § 78u-4(a)(3)(A)(i)(II). 28 This action was filed on August 31, 2023. (Compl.). Notice was published in 1 Business Wire on September 1, 2023, by the law firms Entwistle & Cappucci LLP 2 (“E&C) and Robbins Geller Rudman & Dowd LLP. (Dkt. 15-6). The notice was 3 timely published, lists the claims and the class period, and advises putative class 4 members that they had sixty days from the date of the notice to file a motion to 5 seek appointment as lead plaintiff through counsel of their choice in the lawsuit. 6 See 15 U.S.C. § 78u-4(a)(3)(A). On October 31, 2023, HBK and the Institutional 7 Investors filed their motions for appointment as lead plaintiff within the allotted 8 period. (Dkt. 14, 15). Notice is proper and both movants have satisfied the statutory 9 procedural requirements for moving to be appointed as Lead Plaintiff. 10 2. Largest Financial Interest 11 Turning to step two, courts must determine the most adequate lead plaintiff 12 who is the class member with “the largest financial interest in the relief sought by 13 the class.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(bb). Courts typically consider the Lax14 Olsten factors, which include: “(1) the number of shares purchased during the class 15 period; (2) the number of net shares purchased during the class period; (3) the 16 total net funds expended during the class period; and (4) the approximate losses 17 suffered during the class period.” Peters v. Twist Bioscience Corp., No. 22-cv18 08168-EJD, 2023 WL 4849431 , at *3 (N.D. Cal. July 28, 2023) (quoting In re Olsten 19 Corp. Sec. Litig., 3 F. Supp. 2d 286, 295 (E.D.N.Y. 1998)). The greatest emphasis 20 is on the approximate losses suffered. Xu v. FibroGen, Inc., No. 21-cv-0262321 EMC, 2021 WL 3861454 , at *4 (N.D. Cal. Aug. 30, 2021) (quoting City of Royal 22 Oak Ret. Sys. v. Juniper Networks, Inc., No. 11-CV-04003-LHK, 2012 WL 78780 , 23 at *4 (N.D. Cal. Jan. 9, 2012)). “The PSLRA does not specify how the court should 24 calculate ‘largest financial interest,’ but most courts look to the largest loss from 25 class period investments when sales are matched to purchases on a Last-In-First26 Out (‘LIFO’) basis.” See, e.g., Wasa Med. Holdings v. Sorrento Therapeutics, Inc., 27 No. 20-cv-0966-AJB-DEB, 2021 WL 533518 , at *2 (S.D. Cal. Feb. 12, 2021) (citing 28 Staublein v. Acadia Pharm., Inc., No. 18-cv-1647-AJB-BGS, 2019 WL 927756 , at 1 *2 (S.D. Cal. Feb. 26, 2019) (analyzing movant losses on a LIFO basis)). 2 After review of the competing movants’ briefing, the alleged losses of each 3 competing movant, using the LIFO basis, are as follows: HBK is $29,361,850.10, 4 (Dkt. 14-2); Westchester Funds is $25,764,602.98, (Dkt. 15-4 at 6); Alpine Funds 5 is $8,004,765.00, (id. at 15); Atlas Fund is $16,877,366.13, (id. at 27); and Kryger 6 Funds is $7,501,579.76, (id. at 29). As a group the Institutional Investors have an 7 aggregate loss of $58,148,313.87. (Id.). Based on the briefing submitted, the 8 Institutional Investors have the largest aggregate loss, which HBK doesn’t contest. 9 HBK recognizes that the Ninth Circuit hasn’t addressed whether groups can 10 satisfy the “largest financial interest” by aggregating losses, but challenges 11 whether the four investment funds that make up the Institutional Investors should 12 be aggregated when they have no meaningful pre-existing relationship. (Dkt. 23 13 at 3, 6–14). In support of this argument, HBK cites cases where courts in the Ninth 14 Circuit have refused to appoint as lead plaintiff groups of unrelated individuals. (Id. 15 at 6). In response, the Institutional Investors argue that even if they aren’t allowed 16 to combine all their losses, the Westchester Funds has the largest loss by itself 17 using the LIFO basis ($25,764,602 for Westchester Funds compared to 18 $25,615,529 for HBK), which is why the Institutional Investors should be selected 19 as Lead Plaintiff. (Dkt. 27 at 10–11; 44 at 4). 20 According to the Institutional Investors, HBK’s loss calculation of 21 $29,361,850.10 is inaccurate and doesn’t follow any calculation adopted in the 22 Ninth Circuit. (Dkt. 27 at 2, 5–8). HBK’s “true” loss using the LIFO basis is 23 $25,615,529. (Id. at 8). The Court agrees HBK’s loss calculation is inaccurate. 24 Prior to the Class Period, HBK already held 450,000 shares. (Dkt. 14-2). By July 25 19, 2023, HBK had sold more shares than it purchased during the Class Period, 26 and continued to have more shares sold until it made multiple purchases on July 27 26, 2023. (Id.) HBK failed “to offset its claimed loss with gains for [SIMO] securities 28 purchased before the Class Period and sold during the Class Period.” Ferreira v. 1 Funko, Inc., No. 20-cv-02319-VAP-PJWx, 2020 WL 3246328 , at *7 (C.D. Cal. June 2 11, 2020) (emphasis in original); see also Weisz v. Calpine Corp., No. 02-CV-1200, — 3 — 2002 WL 32818827 , at *7 (N.D. Cal. Aug. 19, 2002) (finding a net seller “may have 4 actually profited, not suffered losses, as a result of the allegedly artificially inflated 5 stock price”); In re Network Assoc. Inc., Sec. Litig., 76 F. Supp. 2d 1017 , 1027 6 (N.D. Cal. 1999) (“[T]he first step is to subtract the number of shares sold by a 7 candidate from those purchased during the class period.”). 8 HBK claims even if Westchester Funds’ calculations are true, the difference 9 between Westchester Funds and HBK is miniscule. HBK argues the difference of 10 0.58% constitutes a “virtual tie” with Westchester Funds, (Dkt. 42 at 2), but other 11 courts “have concluded that any financial difference is meaningful in determining 12 lead plaintiff,” Hessefort v. Super Micro Computer, Inc., 317 F. Supp. 3d 1056 , 13 1060 (N.D. Cal. 2018) (collecting cases). Westchester Funds has the largest loss, 14 so it alone qualifies as the presumptive leader, and the Court doesn’t need to 15 address the question of whether aggregation is appropriate. See In re Surebeam 16 Corp. Sec. Litig., No. 03-cv-1721-JM-POR, 2004 WL 5159061 , at *5 (S.D. Cal. 17 Jan. 5, 2004) (finding the shareholder suffering the largest loss within any of the 18 groups is Spear Capital, a member of FMC Pension Group, so it “makes no 19 practical difference if Spear Capital chooses to associate with other shareholders 20 in order to further distance itself from the next proposed lead plaintiff”). 21 Nevertheless, turning to the issue of aggregation, the Court finds 22 aggregation of the Institutional Investors is appropriate. Courts have declined to 23 aggregate losses of a group of individuals when there is no pre-existing 24 relationship between the group members. See, e.g., Wasa Med. Holdings, 2021 25 WL 533518 , at *5. However, the lack of a pre-existing relationship isn’t dispositive, 26 provided the members are able to actively and cohesively represent the class. See 27 In re Versata, Inc., Sec. Litig., Nos. C 01-1439 SI; C 01-1559 SI; C 01-1703 SI; C 28 01-1731 SI; C 01-1786 SI, 2001 WL 34012374 , at *5–6 (N.D. Cal. Aug. 20, 2001); 1 Sabbagh v. Cell Therapeutics, Inc., Nos. C10-414MJP; C10-480MJP; C102 559MJP, 2010 WL 3064427 , at *6 (W.D. Wash. Aug. 2, 2010). 3 Here, there’s at least two funds that have a pre-existing relationship— 4 Westchester Funds and Alpine Funds—because they have been selected as co5 lead plaintiffs in another securities class action, In re Toronto-Dominion Bank/First 6 Horizon Corp. Sec. Litig., No. 23-cv-2763 (D.N.J.), ECF Nos. 24, 25. (Dkt. 15-5 7 ¶¶ 3, 6). While this may be a suspected “arranged marriage” between the two 8 funds, there is no conclusive evidence suggesting both funds have agreed to move 9 for lead plaintiff together prior to discussing the merits of the case and can’t work 10 together. Hedick v. Kraft Heinz Co., Nos. 19-cv-1339; 19-cv-1845; 19-cv-2807, — 11 — 2019 WL 4958238 , at *7 (N.D. Ill. Oct. 8, 2019) (finding nothing suggests the two 12 institutional investors that have previously worked together as co-lead plaintiffs 13 can’t operate effectively as a unit). In fact, in the initial joint declaration, the 14 Institutional Investors declare, prior to seeking appointment as Lead Plaintiff, they 15 had a conference call to discuss the merits of the claims, how to best represent 16 investors, and the importance of making joint decisions. (Dkt. 15-5 ¶¶ 16, 18–19). 17 If the Court only considered the losses of Westchester Funds and Alpine Funds, 18 they together have an aggregated LIFO loss of $32,890,367.98,6 which exceeds 19 even HBK’s loss calculation of $29,361,850.10. 20 Although the Court needn’t address the aggregation of the other two funds 21 because Westchester Funds and Alpine Funds together have a greater 22 aggregated loss than HBK, see In re Surebeam Corp. Sec. Litig., 2004 WL 23 5159061, at *5, aggregation of the remaining Institutional Investors is appropriate, — 24 — — 25 — 6 HBK argues Alpine Heritage, L.P.’s losses are inflated, (Dkt. 23 at 20), which — 26 — the Institutional Investors contest, (Dkt. 44 at 9 – 10). The Court, for the purposes 27 of calculating the aggregated loss amongst Westchester Funds and Alpine Funds, reduced the amount by $879,000 to account for this alleged — 28 — 1 see Xu, 2021 WL 3861454 , at *10 (finding aggregation of institutional investors 2 was appropriate when there is a pre-litigation relationship, the investors had a 3 conference call with counsel before filing for lead plaintiff, the investors continued 4 to track the case and communicate with each other, and the investors’ commitment 5 to collaborate and resolve disagreements by a majority vote). As noted above, the 6 initial joint declaration indicates that at least two Institutional Investors are acting 7 as lead plaintiff in another securities class action, all Institutional Investors had a 8 conference call to determine the merits of the claims, they all discuss such claims 9 with counsel before filing a motion for Lead Plaintiff, and they all are motivated to 10 work together to achieve the best result. (Dkt. 15-5 ¶¶ 3, 6, 16, 18–19). 11 HBK contends that “critically, the Investor Group says next to nothing about 12 how it intends to prosecute this case and make litigations decisions. . . . [and] has 13 no detail whatsoever about how the Group members will vote on decisions.” 14 (Dkt. 23 at 8). While the original joint declaration didn’t indicate how the Institutional 15 Investors intended to decide disagreements, the Institutional Investors’ 16 supplemental joint declaration addresses HBK’s concerns. In the supplemental 17 joint declaration, the Institutional Investors note that they have been closely 18 tracking the case, will work together to come to a collective decision, and, if a 19 consensus isn’t reached, will use a weighted voting system based on the dollar 20 value of their losses on investments. (Dkt. 44-2 ¶¶ 6, 8). The Court finds 21 aggregation of all Institutional Investors is appropriate because “the benefit that 22 the group would bring to the class amply outweigh any deficiencies.” Xu, 2021 WL 23 3861454, at *10; see also Knisley v. Network Assocs., Inc., 77 F. Supp. 2d 1111 , 24 1115–16 (N.D. Cal. 1999) (“In enacting the PSLRA, Congress ‘unequivocally 25 expressed its preference for securities fraud litigation to be directed by large 26 institutional investors.’”) (quoting Gluck v. Cellstar Corp., 976 F. Supp. 542 , 548 27 (N.D. Tex. 1997)). 28 // 1 3. Rule 23’s Typicality and Adequacy Requirements 2 In addition to possessing the largest financial interest, the PSLRA requires a 3 proposed lead plaintiff to satisfy the requirements of Rule 23. 15 U.S.C. § 78u4 4(a)(3)(B)(iii)(I)(cc). Once a court determines which plaintiff has the largest 5 financial interest, generally “the court must appoint that plaintiff as lead, unless it 6 finds that [plaintiff] does not satisfy the typicality or adequacy requirements” of Rule 7 23(a). In re Cavanaugh, 306 F.3d at 732. The movant “need only make a prima 8 facie showing of its typicality and adequacy.” Hessefort, 317 F. Supp. 3d at 1060– 9 61. “The test of typicality is whether other members have the same or similar injury, 10 whether the action is based on conduct which is not unique to the name plaintiffs, 11 and whether other class members have been injured by the same course of 12 conduct.” Id. at 1061 (citations omitted). “The test for adequacy is whether the 13 class representative and his counsel ‘have any conflicts of interest with other class 14 members’ and whether the class representative and his counsel will ‘prosecute the 15 action vigorously on behalf of the class.’” Id. (citations omitted). At step two, the 16 process isn’t adversarial, and the Rule 23 determination is based on the movant’s 17 pleadings and declarations. In re Mersho, 6 F.4th 891 , 899 (9th Cir. 2021) (citing 18 In re Cavanaugh, 306 F.3d at 730). The Institutional Investors satisfy both 19 requirements. 20 First, the Institutional Investors’ claims are typical of the class. The typicality 21 requirement focuses on whether the presumptive lead plaintiff has suffered the 22 same or similar injuries as absent class members as a result of the same conduct 23 by the defendants and are founded on the same legal theory. Hanon v. 24 Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). “[R]epresentative claims 25 are ‘typical’ if they are reasonably co-extensive with those of absent class 26 members; they need not be substantially identical.” Castillo v. Bank of Am., NA, — 27 — 980 F.3d 723, 729 (9th Cir. 2020) (quoting Hanlon v. Chrysler Corp., 150 F.3d 28 1011, 1020 (9th Cir. 1998), overruled on other grounds by Wal-Mart Stores, Inc. v. 1 Dukes, 564 U.S. 338, 338 (2011)). The Institutional Investors argue they satisfy 2 the prima facie showing of typically because, like all other putative class members, 3 they purchased SIMO’s ADSs during the Class Period based on “Defendants’ 4 materially false and misleading statements and/or omissions.” (Dkt. 15-1 at 9). The 5 Court finds that the Institutional Investors’ claims are typical of those of the absent 6 class members. 7 Second, the Institutional Investors also satisfy the adequacy requirement. 8 This requirement focuses on whether “the representative parties will fairly and 9 adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). The two 10 primary adequacy inquiries are (1) whether there are conflicts of interest between 11 the proposed lead plaintiff and the class and (2) whether plaintiff and counsel will 12 vigorously fulfill their duties to the class. Ellis v. Costco Wholesale Corp., 657 F.3d 13 970, 985 (9th Cir. 2011). The Institutional Investors argue they’ve made a prima 14 facie showing that they’ll adequately and fairly represent the class because they’ve 15 been substantially harmed by Defendants’ misrepresentations and omissions 16 about the merger and have a significant interest in the outcome. (Dkt. 15-1 at 9). 17 Additionally, the firms proposed to serve as Lead Counsel, Saxena White P.A. 18 (“Saxena”) and E&C, are experienced and qualified to prosecute securities class 19 action litigation. (Id. at 10; Dkt. 15-7, 15-8). There isn’t evidence of an actual or 20 potential conflict of interest between the Institutional Investors and the other class 21 members and Saxena and E&C are experienced to represent the interests of the 22 class. The Institutional Investors have satisfied their initial burden and qualify as 23 the presumptive Lead Plaintiff. 24 4. Presumption Not Rebutted 25 Turning to step three, HBK has the chance to rebut the Institutional Investors’ 26 showing that they satisfy Rule 23’s typicality and adequacy requirements. 15 27 U.S.C. § 78u-4(a)(3)(B)(iii)(II); In re Cavanaugh, 306 F.3d at 729–31. The process 28 is adversarial and the presumption may be rebutted by proof that the presumptively 1 most adequate plaintiff won’t fairly and adequately protect the interest of the class 2 or is subject to unique defenses that render it unable to adequately represent the 3 class. In re Mersho, 6 F.4th at 899 (citing In re Cavanaugh, 306 F.3d at 730; 15 4 U.S.C. § 78u-4(a)(3)(B)(iii)(II)(aa)–(bb)). If the presumption isn’t rebutted, the 5 presumptive plaintiff must be selected as lead plaintiff. Id. (citing 15 U.S.C. § 78u6 4(A)(3)(B)(i)). 7 In opposing the appointment of the Institutional Investors, HBK argues that 8 the Institutional Investors won’t adequately represent the class because (1) the 9 appointment of more than one law firm raises potential issues in decision making 10 and (2) “the [Institutional Investors are] an artificial amalgamation of unrelated 11 entities.” (Dkt. 23 at 11–12, 14). The Court disagrees. 12 First, many courts have determined that co-lead counsel would be adequate 13 in representing the class. See, e.g., Salzman v. ImmunityBio, Inc., No. 23-cv14 01216-GPC-WVG, 2023 WL 6305798 , at *2 (S.D. Cal. Sept. 27, 2023); Twitchell 15 v. Enovix Corp., No. 23-cv-00071-SI, 2023 WL 3170044 , at *9 (N.D. Cal. Apr. 28, 16 2023) (appointing Rolnick Kramer Sadighi LLP and The Rosen Law Firm, P.A., as 17 co-lead counsel, and Sawyer & Labar LLP as liaison counsel). Nothing here 18 suggests that Saxena and E&C can’t work together effectively. 19 Second, the Institutional Investors can work together to adequately represent 20 the class. See Xu, 2021 WL 3861454 , at *10. As noted in the initial joint declaration, 21 two funds—Westchester Funds and Alpine Funds—have been appointed co-lead 22 plaintiffs in another securities class action case. (Dkt. 15-5 ¶¶ 3, 6). In addition, the 23 Institutional Investors have indicated all Institutional Investors had a conference 24 call to determine the merits of the claims, discussed such claims with counsel 25 before filing a motion for Lead Plaintiff, and are motivated to work together to 26 achieve the best result. (Id. ¶¶ 16, 18–19). The Institutional Investors have also 27 been closely tracking the case and will use a weighted voting system to decide any 28 disagreements that may arise. (Dkt. 44-2 ¶¶ 6, 8). The Institutional Investors, along 1 with Saxena and E&C, will be able to fairly and adequately protect the interest of 2 the class. 3 HBK also argues that the Institutional Investors have trading patterns 4 subjecting them to unique defenses, which makes them atypical to represent the 5 class. For example, (1) Westchester Funds and Kryger Funds made their first 6 purchase of SIMO’s ADSs on the last day of the Class Period after the China 7 Administrator granted regulatory approval, (Dkt. 23 at 15; 42 at 3) and (2) Atlas 8 Fund was engaged in market-making activities, employed high-frequency trading 9 strategies to invest in SIMO, and sold SIMO’s ADSs after the China Administrator 10 granted regulatory approval but before MaxLinear announced it wasn’t going to 11 merge, (Dkt. 23 at 16–18; 42 at 3).7 The Court disagrees. 12 The Court first looks to Westchester Funds and Kryger Funds. It’s 13 uncontested that Westchester Funds and Kryger Funds purchased SIMO’s ADSs 14 on the last day of the Class Period. (See Dkt. 15-3). However, that doesn’t 15 foreclose that Westchester Funds and Kryger Funds relied on Defendants’ 16 assertion that the merger will proceed once they obtain regulatory approval, which 17 is what each declared it did when making such purchases. (Dkt. 15-5 ¶¶ 4, 13). It 18 follows logically to wait to purchase SIMO’s ADSs after regulatory approval 19 because that was the triggering event for the merger. This is evidenced by the 20 largest trading volume occurring on July 26, 2023, compared to the rest of the 21 Class Period. (Dkt. 44-3). HBK itself made numerous purchases of hundreds of 22 thousands of SIMO’s ADSs on July 26, 2023, which exceeds all other purchases 23 it made during the Class Period. (Dkt. 14-2). While the Court recognizes that 24 Defendants may make this argument against Westchester Funds and Kryger 25 Funds, this doesn’t make them atypical of the potential class when numerous — 26 — — 27 — 7 HBK doesn’t argue that Alpine Funds made any trades that would subject them — 28 — 1 others, including HBK, made large purchases after regulatory approval was 2 announced. Haley v. Medtronic, Inc., 169 F.R.D. 643, 649 (C.D. Cal. 1996) 3 (“[P]laintiff’s claim can still be typical even if the class members’ injuries were 4 suffered at different times.”). 5 The Court now turns to Atlas Fund. The Court recognizes that Atlas Fund 6 had numerous trades during the Class Period where it bought and sold the same 7 number of shares for the same price. (See Dkt. 15-3). However, this isn’t enough 8 to conclude that Atlas Fund is a market maker that engaged in quantitative or high9 frequency trading strategies without relying on public information, which the 10 Institutional Investors refute because Atlas Fund isn’t a registered market maker 11 and declared that it relied on Defendants’ public statements when investing in 12 SIMO’s ADSs. (Dkt. 44 at 9); see also Twitchell, 2023 WL 3170044 , at *7. 13 Moreover, while it may be odd to sell shares after regulatory approval was 14 announced and prior to MaxLinear’s announcement it wasn’t proceeding with the 15 merger, HBK fails to account for the numerous shares purchased by Atlas Fund 16 on July 26, 2023. Atlas Fund sold 32,256 shares, but purchased over 523,546 17 shares. (Dkt. 15-3). Selling some SIMO’s ADSs doesn’t make Atlas Fund’s 18 purchases atypical of the class. 19 “HBK does not offer ‘proof’ that [the Institutional Investors] should be 20 disqualified now. Hardy v. MabVax Therapeutics Holdings, Nos. 18-cv-0116021 BAS-NLS; 18-cv-01819-BAS-NLS, 2018 WL 4252345 , at *8 (S.D. Cal. Sept. 6, 22 2018) (citing In re ForceField Energy Inc. Sec. Litig., Nos. 15 Civ. 3020(NRB); 15 23 Civ. 3141(NRB); 15 Civ. 3279(NRB), 2015 WL 4476345 , at *5 (S.D.N.Y. July 22, 24 2015) (“By directing district courts to choose lead plaintiffs at the earliest stage of 25 class litigation, Congress expressed a judgment that the benefits of appointing a 26 high-loss plaintiff early in litigation would outweigh the costs of occasionally having 27 to replace the lead plaintiff later on.”)). The Court appoints the Institutional 28 Investors as Lead Plaintiff in this case. See In re Cavanaugh, 306 F.3d at 732 1 (holding that absent proof that the proposed lead plaintiff with the largest financial 2 interest doesn’t satisfy the requirements of Rule 23, this plaintiff is “entitled to lead 3 plaintiff status”). 4 B. Motion to Appoint Lead Counsel 5 The PSLRA provides that the “most adequate plaintiff shall, subject to the 6 approval of the court, select and retain counsel to represent the class.” 15 U.S.C. 7 § 78u-4(a)(3)(B)(v). The Institutional Investors wish to appoint Saxena and E&C 8 as Lead Counsel in this case. (Dkt. 15). On their firm resumes, Saxena and E&C 9 have prosecuted numerous securities litigations and securities fraud class actions 10 successfully on behalf of investors, including obtaining recoveries of millions of 11 dollars, and have served as lead or co-lead counsel in numerous securities class 12 action cases. (Dkt. 15-7, 15-8). The Court finds Saxena and E&C have the 13 resources and experience to effectively manage the class litigation. Saxena and 14 E&C are appointed as Lead Counsel. See Cohen v. U.S. Dist. Ct. for N. Dist. of 15 California, 586 F.3d 703 , 712 (9th Cir. 2009) (“We hold that if the lead plaintiff has 16 made a reasonable choice of counsel, the district court should generally defer to 17 that choice.”). 18 II. CONCLUSION 19 The Institutional Investors’ motion for Appointment as Lead Plaintiff and 20 Approval of Selection of Lead Counsel is GRANTED, (Dkt. 15), and HBK’s 21 competing motion is DENIED, (Dkt. 14). Pursuant to 15 U.S.C. § 78u-4(a)(3)(B), 22 the Institutional Investors are APPOINTED to serve as Lead Plaintiff. Pursuant to 23 15 U.S.C. § 78u-4(a)(3)(B)(v), the Institutional Investors’ selection of Saxena and 24 E&C as Lead Counsel for the class is APPROVED. Within fourteen (14) days of 25 the filing of this Order, the parties must meet and confer and propose a schedule 26 to the Court for the filing of the amended complaint or designating the original 27 complaint as the operative complaint, and the response to such complaint. 28 IT IS FURTHER ORDERED that: 1 1) Saxena and E&C will serve as Co-Lead Counsel and have the 2 ||following responsibilities and duties: coordinate the briefing and argument of 3 ||motions; coordinate the conduct of discovery proceedings; coordinate the 4 examination of witnesses in depositions; coordinate the selection of counsel to act 5 ||as a spokesperson at pretrial conferences; call meetings of the Institutional 6 ||Investors’ counsel as they deem necessary and appropriate from time to time; 7 || coordinate all settlement negotiations with counsel for Defendants; coordinate and 8 || direct the pretrial discovery proceedings, the preparation for trial, and the trial, and 9 ||to delegate work responsibilities to selected counsel as may be required; and 10 ||Supervise any other matters concerning the prosecution, resolution, or settlement 11 ||of this case. 12 2) | No motion, request for discovery, or other pretrial proceedings should 13 initiated or filed by the Institutional Investors without the approval of Co-Lead 14 || Counsel, to prevent duplicative pleadings or discovery. No settlement negotiations 15 ||should be conducted without the approval of Co-Lead Counsel. 16 3) Co-Lead Counsel have the _ responsibility of receiving and 17 ||disseminating Court orders and notices. 18 IT IS SO ORDERED. — 19 — 20 || Dated: December 20, 2023 lau Af. (buy wy 21 Honorable Larry Alan Burns 29 United States District Judge — 23 — — 24 — — 25 — — 26 — — 27 — — 28 —