Q: What is a Securities Class Action ?

A Securities Class Action is a lawsuit brought on behalf of many investors who seek to be compensated for corporate wrongdoing. In 1995 the US Congress allowed securities to be included under class law which levelled the playing field between large corporations and investors whilst enforcing corporate governance. 

In Securities Class Actions one or more named plaintiffs stand up for groups of shareholders during the course of the litigation since all have been injured by a common set of actions.

Securities Class Actions are initiated when a company broadcasts statements about themselves which later turn out to be false or misleading. Investors that purchased the company's securities between the time these statements were made and when the truth was revealed can recover damages by claiming against the company for artificially inflating the value of the securities that they aquired.

 Q : What is a Lead Plaintiff ?

A Lead Plaintiff in a Securities Class Action is a class member selected by the court to act as the representative of the class who will then pursue the lawsuit. The Court will select one or more class members to serve as the Lead Plaintiff. One of the most important reasons for those seeking Lead Plaintiff status is to control the litigation and seek the best settlement offer. Many Institutions will chose to act as Lead Plaintiff as it demonstrates to their client base and shareholders that they actively take steps to combat corporate wrongdoing.

Q : What is a Class Member ?

Unlike the Lead Plaintiff a Class Member's role is more of a passive one. At the outset of a Securities Class Action everyone who purchased securities during the period of misrepresentation automatically becomes part of the action. If money is recovered through a settlement or trial Class Members will be required to complete a "Proof of Claim" form to recover the proportion of money that is rightfully theirs. There are specified time limits to submit this documentation and timescales are very tight. Additionally many non US investors are not even aware of settlement awards let alone deadlines for claiming damages. Class Solutions Limited will ensure that you are aware of every potential opportunity for recovery and assist you through the claims procedure.

 Q : Can I "Opt-Out" and take my own class action ?

Disadvantaged investors can also opt-out of Securities Class Actions and instruct an attorney to pursue a separate class action providing their loss is substantial. Class Solutions Limited have unique relationships with US Law firms and can introduce clients to attorneys and advise the next appropriate course of action.

 Q : How are damages calculated in a Securities Class Action ?

Each Securities Class Action has what is known as a "Class period". This is a specific period of time identified which STARTS on the day that a company makes a false or misleading statement of a material fact or the day that the company has a duty to disclose a material fact and fails to do so and ENDS on the day that the untrue statement or omission is publicly announced. To calculate damages the courts will appoint experts to determine the amount that the stock was inflated during the class period. The calculation attempts to roughly judge the amount that you would have paid for your stock if all material facts were known at the start of the class period. The figure may not be the same as the total amount that you lost on your investment because the stock price may have  dropped during the class period due to factors other than the declared fraud.

Q : How do I recover my loss ?

If you have lost money as a result of a fraud Class Solutions Limited can guide you through the recovery process from identification of potential claims, lodgement of any claims right through to collection of proceeds which will be made to you directly from the appointed paying agent. Traditionally to have a valid claim you will need to have purchased or held stock in the "Class Period" where the price has been artificially inflated. At the successful conclusion of the Class Action the courts will award a settlement amount. To recover your share of the settlement fund available to the class you will need to complete a "proof of claim " form and return it with the relevant documentation. CSL are here primarily to assist with this process.

Q: How much will I receive ?

Until the litigation is well under way it is not possible to ascertain what, if any , recovery might be acheived. The majority of cases will settle but some may well go to trial while others may be dismissed. In addition to this some of the settlement monies may not come from the company itself but from insurance coverage or indeed there may be additional claims against other defendants as in many recent high profile cases eg Auditors.

Settlements are predominantly in cash but can involve a payment of stock, other compensation or a combination of these. Awards are distributed to all members of the class in proportion to the damages suffered by each class member. There is no way of telling what the settlement will be until the claims process is completed by the Paying Agent also sometimes known as the Claims Administrator.

Q : How long does it take for a class action to be resolved ?

Again this is difficult to determine. Decisions in some Securities Class Actions can take one year while others go on for six years. The average case takes approximately two to three years from the time the complaint is filed until conclusion and distribution of the award. It should be remembered that there are many factors that can extend this time period including the length of time the court takes to make decisions, rejection or appeals against these decisions, the compexity of the fraud, and the processing of claims by the Claims Administrators.