In 1994, Greenfield's license to practice law in New Jersey and Pennsylvania was suspended for a year. He was reinstated in 1995.
In the case involving Colbart Birnet, there's no indication the limited partnership was serving as a shell company. However, it was incidents like the one involving Greenfield that led to the passage of the federal Private Securities Litigation Reform Act of 1995 -- a law that changed the playing field for securities class-actions. The nine-year-old law was aimed at cracking down on some of the abusive tactics being used by class-action lawyers.
One provision of the law sought to create an arm's-length distance between the lawyers heading up a class action and the lead plaintiff in a lawsuit. Federal lawmakers had hoped to encourage lead plaintiffs to take a more active role in class-action lawsuits by pressing their lawyers on settlement negotiations and the divvying up of legal fees.
"There's case law saying you shouldn't be lead plaintiff and lead counsel and people have been disqualified for that,'' says Jill Fisch, a securities professor with Fordham University School of Law. "This is something that is material and should be disclosed.''In the Federated case, at least, there's no indication that either Lifshitz or his law firm has disclosed their ties to Colbart Birnet. Lawyers for Federated declined to comment.