Tecku v. YieldStreet Inc.
- Victor Marrero
- 1:20-cv-07327
- U.S. District Court · Southern District of New York
- 16
In Tecku v. YieldStreet, Judge Marrero denied group lead-plaintiff appointment but appointed Tjok and approved co-lead counsel.
The ruling affects Michael Tecku, David Finkelstein, Lawrence Tjok, the proposed class of Yieldstreet investors, and the proposed class counsel. Tjok became lead plaintiff, while the three-person group was not appointed jointly; Tjok’s selected firms were appointed as lead co-counsel subject to the court’s conditions.
What happened
In Tecku v. YieldStreet Inc., three investors asked to be appointed together as lead plaintiffs in a proposed securities class action and asked the court to approve their chosen co-lead lawyers. The case alleges that Yieldstreet and related defendants misrepresented important facts about investment products.
Judge Marrero found that the investors had not shown how they would work together or manage the case independently from their lawyers. David Finkelstein had the largest claimed loss, but his investments did not cover all of the funds involved in the proposed class’s claims, so his claims were not typical of the class.
The court denied the group’s request for appointment as lead plaintiff but granted the motion to appoint Lawrence Tjok as lead plaintiff and to appoint Tjok’s chosen firms as lead co-counsel, subject to limits on duplicative services and increased fees or expenses. Judge Marrero ruled that Tjok had shown his claims were typical and that he could adequately represent the class.
The detailed version
- Tecku v. YieldStreet Inc. · No. 1:20-cv-07327
- Victor Marrero
- Aug. 22, 2022
Background
The plaintiffs alleged that Yieldstreet Inc., Yieldstreet Management LLC, YS Altnotes I LLC, YS Altnotes LLC, and Michael Weisz violated federal securities laws and New York law by misrepresenting material facts about investment products offered through Yieldstreet’s online investment portal. The plaintiffs sought to represent a proposed class of investors.
Michael Tecku, David Finkelstein, and Lawrence Tjok moved under the Private Securities Litigation Reform Act to be appointed jointly as lead plaintiffs and to have their selected firms appointed as co-lead counsel. No other member of the proposed class moved for appointment as lead plaintiff.
Joint Lead-Plaintiff Request
The court denied the request to appoint Tecku, Finkelstein, and Tjok as a group. Although the plaintiffs had filed the operative complaint, they provided no evidence of prior relationships, cooperative efforts, plans for managing the case together, communications among themselves, relevant sophistication, or a willingness to manage the litigation separately from their lawyers. The court found that their boilerplate certifications were insufficient to show that the group could function cohesively and effectively manage the case.
Individual Lead Plaintiff
The court then considered each investor individually. Finkelstein claimed the largest loss, $150,000, followed by Tjok, who claimed a $125,000 loss, and Tecku, who claimed a $100,000 loss. Finkelstein was therefore the presumptive lead plaintiff based on financial loss, but the court found that his claims were not typical of the proposed class because he invested in the Vessel Deconstruction Fund IV but not in Yieldstreet’s Louisiana Oil & Gas Fund, while the proposed class’s claims involved alleged misrepresentations affecting investors in both types of funds.
Tjok invested in both the Vessel Deconstruction Funds and the Louisiana Oil & Gas Fund. The court found that his claims were typical because, like other proposed class members, he alleged that he bought the notes during the class period, relied on misrepresentations in the offering documents, and suffered damages. The court also found that Tjok made the required preliminary showing that he could adequately represent the class. No class member had offered evidence rebutting that conclusion, and the court found no unique defenses or other reason preventing Tjok from fairly and adequately protecting the class’s interests.
Lead Counsel
The court granted the motion to appoint Tjok as lead plaintiff. Tjok selected Peiffer Wolf Carr Kane Conway & Wise, LLP, and Sonn Law Group PA, as co-lead counsel. The court found that the firms had sufficient securities-litigation experience and could adequately represent the class, provided that their use of co-counsel did not duplicate services or increase attorney fees or expenses.
Disposition
The court ordered that the motion was denied as to the group’s appointment as lead plaintiff and granted as to Tjok’s appointment as lead plaintiff and appointment of Tjok’s chosen counsel as lead co-counsel.
Read the full 16-page opinion on CourtListener, the free public archive maintained by the Free Law Project.