Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—E.D. Mich.: Court grants motion to renew class certification efforts in Rocket securities fraud case, (Apr 21, 2025)
Law Firms Mentioned:Goodwin Procter LLP | Labaton Keller Sucharow LLP
Organizations Mentioned:Goodwin Procter, LLP | Rocket Companies, Inc.
A Michigan federal court allowed SoCal to seek renewed class certification in its insider trading case against Rocket Companies, requiring new lead plaintiff proceedings under the PSLRA.
The federal district court in Michigan granted the Construction Laborers Pension Trust for Southern California’s (SoCal) motion for leave to file a renewed motion for class certification in the securities fraud case against Rocket Companies, Inc. and its executives. The case originally involved both Carl Shupe and SoCal as proposed class representatives, but class certification was denied in September 2024 due to issues with investor reliance and the inadequacy of both Shupe and SoCal as representatives. Since then, Shupe has dismissed his claims, and SoCal has indicated an intent to narrow its focus solely to insider trading claims, abandoning prior fraudulent misrepresentation allegations (Construction Laborers Pension Trust for Southern California v. Rocket Companies, Inc., No. 1:21-cv-11528-TLL-APP (E.D. Mich. Apr. 17, 2025)).
Following this shift, SoCal filed a hybrid motion seeking permission to refile for class certification and simultaneously requested reconsideration of the prior denial of a subclass based on insider trading. Although Civil Rule 23 allows for renewed motions, securities class actions are subject to the Private Securities Litigation Reform Act (PSLRA), which requires a designated lead plaintiff. With Shupe no longer involved, the court clarified that new PSLRA lead plaintiff proceedings must be initiated if SoCal wishes to proceed with class allegations.
The court ordered SoCal to submit supplemental briefing by May 9, 2025, clarifying whether it intends to pursue previously dismissed fraudulent misrepresentation claims individually. Additionally, if SoCal decides to proceed with a class focused on insider trading, it must publish notice in a national business publication by the same date to inform potential class members and allow them 60 days to file motions to serve as lead plaintiff. This order does not close the case and leaves open the possibility of renewed class certification proceedings.Bottom of Form
The case is No. 1:21-cv-11528-TLL-APP.
Judge: Ludington, T.
Attorneys: Jake Bissell-Linsk (Labaton Keller Sucharow LLP) for Construction Laborers Pension Trust For Southern California. Adam Slutsky (Goodwin Procter LLP) for Rocket Companies, Inc.
Companies: Rocket Companies, Inc.
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