Judge P. Kevin Castel
Chinese online retailer LightInTheBox Holding Co.’s (LITB) American Depository Shares are listed on the New York Stock Exchange. Three putative class actions were filed within weeks of LITB’s Aug. 19 announcement that second quarter financial results fell short of market expectations, which caused share prices to fall 40 percent. Of the five competing motions seeking consolidation and lead plaintiff’s appointment, the court granted only that of Zheng, whose total losses were alleged to be $229,506. No one had a larger financial interest in the relief sought by the class. Neither of the two lawyer-generated “LightInTheBoxInvestorGroup[s]” (LITBIG 1 and LITBIG 2) merited recognition as a group for calculating the “ largest financial interest” under the Private Securities Litigation Reform Act (PSLRA). Individual LITBIG 1 members lacked a common connection other than shared claims held by all putative class members. LITBIG 1′s voting procedures also varied from PSLRA’s presumption that the movant with the largest financial interest will control the litigation. Appointment of LITBIG 1 as lead investor would give control over litigation to Li—who suffered the fourth-largest loss—not to the investor that suffered the largest financial loss.
