May 12 (Bloomberg) -- A group of institutional investors including Mississippi’s pension system was picked to lead U.S. securities litigation against Satyam Computer Services Ltd., the software-services provider at the center of India’s biggest corporate fraud.

U.S. District Judge Barbara Jones in New York appointed the group as lead plaintiff in an order today. Satyam opposed the institutional investors as lead plaintiff in part because the Mississippi Public Employees’ Retirement System bought common shares rather than its American depositary shares, or ADSs, the focus of most of the suits that were filed.

“The class in this consolidated action may potentially encompass investors based in the U.S. and foreign jurisdictions who purchased Satyam ADSs and common stock,” Jones wrote. “These investors have a broad range of interests to protect and various defenses to overcome.”

Satyam’s shares and ADSs lost most of their value after Chairman Ramalinga Raju revealed an accounting fraud on Jan. 7 and resigned. Investors in the U.S. filed at least a dozen lawsuits, which have been consolidated before Jones.

Robert Olivier, a Satyam spokesman, didn’t immediately return a call for comment.

Labourers’ Pension Fund of Central and Eastern Canada, which says it lost $335,649 investing in Satyam, also opposed the institutional-investor group, according to Jones. David Rosenfeld, a lawyer for the Canadian fund at Coughlin Stoia Geller Rudman & Robbins LLP in New York, didn’t immediately return a call for comment.

31 Percent Stake

After Raju’s disclosures, India’s government dismissed the Satyam board and appointed new directors. Tech Mahindra Ltd., the Pune, India-based software company partly owned by BT Group Plc, last month bought a 31 percent stake in Hyderabad-based Satyam.

“If the allegations of the complaints are true, then Satyam has been a victim of a major embezzlement,” Warren Stern, a lawyer for Satyam at New York-based Wachtell Lipton Rosen & Katz, said at a May 7 hearing on the lead-plaintiff question. “Satyam stands in the shoes of many institutional investors.”

Satyam raised $161.9 million from the May 2001 sale of the ADSs. About $50 million of that went into Satyam’s bank accounts, and the balance has yet to be traced, according to an official at India’s Ministry of Corporate Affairs, who asked not to be identified because the report the information was based on wasn’t public.

In addition to Mississippi PERS, the lead-plaintiff group includes a U.K. pension fund, a Danish pension fund and a Norwegian fund manager.

Legal Fees

In class actions, the lead plaintiff manages the case, including approval of any settlement. Its attorneys usually get the majority of the legal fees, potentially millions of dollars in this case.

The person or company with the largest financial interest is typically chosen to lead a securities-fraud class action. The lead plaintiff must be able to protect the interests of the class and not be vulnerable to a unique defense by the company being sued. The lead plaintiff is often an institutional investor.

ADSs, also called American depositary receipts, are issued by U.S. banks to allow investment in non-U.S. companies.

“This class is very clearly comprised of investors around the world who purchased ADRs of Satyam, as well as U.S. investors who bought common shares,” Gerald Silk, a lawyer for Mississippi PERS, said at the May 7 hearing. “Clearly this is a global fraud.”

$11 Billion

Those investors lost as much as $11 billion, Silk said.

Besides Mississippi, Satyam challenged the fitness of two other group members to lead the case. It argued in court papers that Sampension KP Livsforsikring AS, the government pension fund in Hellerup, Denmark, and Skagen AS, the fund-management company in Stavanger, Norway, were ineligible because their ADSs were sold before the fraud was revealed, putting them at odds with the other investors, Satyam said.

“Because these parties sold their securities at different periods during the proposed class period, they are well-situated to represent the full range of potential ADS purchasers,” Jones wrote, referring to Skagen, Sampension and Sheffield, England- based Mineworkers’ Pension Scheme.

$40.2 Million

The four-member lead group claims losses of $40.2 million: $16.8 million for Skagen; $12.7 million for Mississippi PERS; $8.31 million for Mineworkers’ Pension; and $2.44 million for Sampension.

Skagen said it bought ADS claims from unidentified Satyam investors.

Jones also appointed four law firms to run the plaintiff’s litigation: Radnor, Pennsylvania-based Barroway Topaz Kessler Meltzer & Check LLP; Silk’s firm, New York-based Bernstein Litowitz Berger & Grossmann LLP; Wilmington, Delaware-based Grant & Eisenhofer PA; and New York-based Labaton Sucharow LLP.

The case is In re Satyam Computer Services Ltd. Securities Litigation, 09-md-2027, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Thom Weidlich in New York at tweidlich@bloomberg.net.

Last Updated: May 12, 2009 15:13 EDT