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What is the securities class action?
A securities class action is a legal action filed on behalf of several investors that have lost money investing in a specific security or stock due to deceptive stock manipulation or through federal or state securities law violation. According to federal law, these cases are filed by one or more stockholders referred to as “Lead Plaintiffs” on behalf of all other investors who have experienced financial losses because of buying company shares during the “class period,” during which securities law violations have inflated the stock value.
What is a securities class period, and how is it determined?
The period during which it is often thought that supposed fraud or securities law violations may have inflated the price of the shares in question is known as the class period. The only participants to the class action lawsuit are those individuals who purchased the stock at this time. After thorough investigation and research, the plaintiff’s counsel establishes the class period. As new material is revealed in the discovery phase of the action, the class period may occasionally alter.
Who is a Lead Plaintiff?
A Lead Plaintiff is a spokesperson chosen by the court to represent the other class members and perform their legal obligations. The court needs to ascertain that the suggested Lead Plaintiff’s claims are similar to other class participants to designate the Lead Plaintiff and that the Lead Plaintiff will effectively represent the whole class members’ interests.
Who can be chosen by the court to be the lead plaintiff?
According to the Private Securities Act of 1995, the Lead Plaintiff should be the one or group of individuals who, in the court’s judgement, have the greatest financial interest in the relief requested by the class. The “biggest financial interest” can be decided by courts in a variety of different ways. As a result of claimed violations of securities laws, some courts select the Lead Plaintiff based on the dollar amount of the alleged loss, while other courts select the Lead Plaintiff according to the percentage of the alleged loss in net worth. Additionally, depending on the circumstance, a number of entities and/or individuals may be selected to serve as “Co-Lead Plaintiffs.”
What kind of recovery should I expect?
Before the lawsuit is well under way, it is impossible to determine the amount of compensation available, whether through a settlement or following a verdict at trial. Securities cases that aren’t outright rejected from court due to legal reasons usually reach an agreement. In most cases, a settlement involves the payment of cash, stock, or both to a pooled fund that will be distributed to the class in proportion to how much each member has lost. The maximum recoverable sum is determined by the illegal behavior, attorneys’ fees, and charges.
How long does a securities class action typically take to resolve or settle?
From the time a lawsuit is filed until it is settled—either through a settlement money given to investors, a judgment, or dismissal—it typically takes one to three years. This is only an approximate estimate, though; some cases take longer to resolve than others, especially when an appeal is involved.
