Frequently Asked Questions
What is a Class Action? A Class Action is a case brought against a company whose actions have damaged many people in a similar way. Specifically in a securities Class Action, a company's misrepresentations that cause the stock price to be artificially inflated (thereby causing serious losses when the truth is disclosed to the public) are actionable for violations of the federal securities laws. If the case results in a successful recovery, either through settlement or trial, all class members receive their portion of the amount paid by the wrongdoers. Back to Top
How many people are needed to bring a Class Action? A single person who has been injured may bring a Class Action on behalf of everyone who has been harmed. It is common, however, after the action has been started for many other injured people to join the class suit. If you are interested in consulting an attorney about a possible Class Action case, you may contact us at 1-800-321-0476 or e-mail us at info@labaton.com. Back to Top
How can I tell if I've been a victim of a securities fraud? Every case is different but when a stock has dropped, your loss may be due to fraud when: - Company executives misrepresented facts relating to important aspects of the business, or held off revealing "bad news" that should have been disclosed earlier.
- The company or its accountants "restate" financial results to reflect the true state of the company's financial affairs.
- The stock drops rapidly on a disclosure of wrongdoing by the company or its executives or employees.
- Before bad news is revealed, insiders engage in insider trading by selling their shares at inflated prices.
- Many other scenarios may be reflective of fraud. If you are unsure of your rights, you may wish to consult an attorney.
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Are unfair deals with insiders or related companies considered fraud? These deals may represent a type of improper conduct usually referred to as "breach of fiduciary duty." Such wrongdoing includes waste of your company's assets, unfair business transactions with insiders or related entities, agreeing to a sale of your company at a price that doesn't reflect its true value, or any other act that improperly robs a company or its shareholders of value. In such cases, a suit can be brought on behalf of the company and/or its shareholders to recover damages, or to ensure that shareholders are treated fairly. Back to Top
Can I bring a securities case if I never sold at a loss? Yes. In almost all cases, so long as you held when your stock dropped in reaction to bad news, you may bring a case. What matters is that you bought your stock at a fraudulently inflated price. Your rights are the same whether you later sold at a loss or have held some or all of your shares in the hope that the price will recover. You do not have to sell your shares to participate in a lawsuit, nor are you required to keep them. Damages recoverable pursuant to the federal securities laws are not necessarily the same as what someone would consider to be a loss or a gain in everyday terms. If you are interested in consulting with us in this regard, you may contact us at 1-800-321-0476 or e-mail us at info@labaton.com. Back to Top
Can I participate in the Class Action if I made money on the security during the class period? If you did not incur an overall loss as a result of purchasing the security, you will not benefit from any potential recovery. The lawsuit is for persons who purchased the security and lost money as a result of the company's alleged violations of the securities laws. Back to Top
Do Class Actions produce substantial recoveries? While the result obtained ultimately depends on the strength of the case, it is a myth that Class Actions do not produce substantial returns for claimants. For instance, settlements in In re American Continental/Lincoln Savings & Loan Securities Litigation yielded approximately $250 million, over eighty percent of total damages of $288 million. More recently, Waste Management, Inc. shareholders recovered $457 million. Strong cases can and do yield strong recoveries. Back to Top
How are attorneys' fees paid in a Class Action? Almost all Class Actions are brought on a contingent basis, which means that the attorneys only get paid out of any recovery amount they obtain. This system helps insure that many investors or consumers with small losses can easily afford to bring Class Actions to assert their rights. Back to Top
How am I eligible to be included in the class? You are a member of the class if your purchases of the security were made during the "class period," that is, the alleged period of time that the company and others violated the securities laws. The methods for acquiring the securities that are covered in a Class Action are open-market purchases, investments made in a 401K or IRA account, or exchanges of shares through a merger or acquisition, to name a few. Gifts and employee stock options are typically excluded from securities Class Actions, although they may qualify for other types of civil actions. Back to Top
Do I have to be a U.S. citizen to participate in a Class Action? No. As long as your transactions were made on a U.S. exchange, you can participate in the Class Action. Back to Top
What is a Lead Plaintiff? Congress established the Private Securities Litigation Reform Act ("PSLRA") in 1995 to provide guidelines as to the way the securities litigation practice is managed. The PSLRA requires the court to appoint a "Lead Plaintiff" based, among other things, upon the amount of financial loss incurred as a result of purchasing the security. The court will appoint the person or entity who makes a motion with the court within the specified time (60 days from the date of the first notice of Class Action) and who have the largest financial loss to be Lead Plaintiff, and the law firm representing them is appointed Lead Counsel. The Lead Plaintiff and Lead Counsel will represent the interests of the entire class and have an obligation to the class to obtain the best results possible. The Lead Plaintiff works directly with the Lead Counsel during the prosecution of the case. Back to Top
Should I apply to become a Lead Plaintiff? You should most definitely consider this option. Being a Lead Plaintiff means that you have an active part in the litigation of the case and represent the shareholders in the class. You will be in a position to participate in making critical decisions regarding the litigation, including whether to settle the action and at what amount, and the formula to be used in determining attorneys' fees. If you have incurred a substantial loss as a result of purchasing the security, then being Lead Plaintiff is a way that you can assist in recovering your losses. Back to Top
How will I be notified if I choose not to be a named Plaintiff in the action? If you are a member of the proposed class, notices will be mailed out to class members by the court-appointed administrator. Back to Top
When will this case be resolved? It varies for each case, but typically Class Actions take several years to be finally resolved. Even if there is a settlement, it may be years after the settlement is reached before all of the claims can be processed accurately. Therefore, do not expect a speedy resolution, but be sure to retain your records so that you can provide documentation of your purchases in the event of a settlement. Back to Top |
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