Kristal v. Mesoblast Limited

Background

This case is one of two similar proposed securities-fraud class actions pending against Mesoblast Limited, Silvin Itescu, and Josh Muntner. The plaintiffs alleged that they purchased or otherwise acquired Mesoblast securities between April 16, 2019, and October 1, 2020. They asserted claims under Section 10(b) of the Securities Exchange Act and Rule 10b-5, as well as Section 20(a) of that Act. The allegations concerned allegedly false or misleading statements and an alleged failure to disclose material information about Mesoblast’s business.

The related action was identified in the opinion as Mauskopf v. Mesoblast Limited, No. 20-CV-9111. Five investors or groups of investors moved to consolidate the actions, be appointed lead plaintiff, and have their selected lawyers appointed lead counsel: Frank Fayz, Mordechai Vogel, Mohammed Al-Ostaz and Ahmed Elosath, Marc Percival, and Dieu Gregoriou. Gregoriou withdrew his motion, and Vogel, Al-Ostaz, and Percival filed notices stating that they did not oppose Fayz’s motion and did not have the largest financial interest in the action.

Consolidation

The court granted the request to consolidate the related actions under Federal Rule of Civil Procedure 42. It found that both cases asserted the same two claims against the same defendants, involved the same proposed class period, and concerned the same allegedly false or misleading statements and alleged nondisclosures. The related action was consolidated into this case, and future filings were directed to be filed under docket number 20-CV-08430 unless the court ordered otherwise.

Lead Plaintiff

The Private Securities Litigation Reform Act requires the court to appoint the proposed class member most capable of adequately representing the class. The statute generally presumes that the appropriate lead plaintiff is the movant with the largest financial interest who timely sought appointment and satisfies the relevant requirements of Federal Rule of Civil Procedure 23.

The court found that Fayz timely filed his motion, had the largest financial interest, and satisfied the applicable Rule 23 requirements. The opinion states that Fayz reported a $60,230 loss from his purchase of Mesoblast securities and that no other movant reported a greater loss. The court also found that Fayz’s claims were typical because they arose from the same alleged conduct as the other proposed class members’ claims. It found no apparent conflict between Fayz and the class and concluded that the presumption in Fayz’s favor had not been rebutted.

The court therefore appointed Fayz as lead plaintiff.

Lead Counsel

The court approved Fayz’s selection of the Rosen Law Firm as lead counsel. It found that the firm had extensive experience prosecuting securities class actions and was well qualified to represent the proposed class.

Disposition

The court granted Fayz’s motion to consolidate, consolidated the related action into Kristal, appointed Fayz as lead plaintiff, and approved Fayz’s selection of the Rosen Law Firm as lead counsel. The opinion did not decide the merits of the alleged securities-fraud claims.