Shareholder Class Actions
Have you ever received a notice in the mail about a shareholder class action for a stock you owned at one time? Have you ever wondered how these types of class actions are initiated?
One way to get familiar with the process is searching for class actions in press releases. For example, I found four press releases issued on the same date (Nov. 17, 2016) by four different law firms alerting the public that a class-action lawsuit was filed against a certain company. The case was filed in the Northern District of California on behalf of shareholders who purchased that company’s stock during an eight-month period in 2016. The shares were traded on the NASDAQ market. The allegation was securities fraud.
The four law firms described themselves as a “global investor rights law firm,” “a national shareholder rights litigation firm,” a “corporate litigation boutique” and a national firm whose lawyers “have recovered hundreds of millions of dollars for aggrieved shareholders.” As explained in the press releases, a lead plaintiff was being sought. A lead plaintiff is appointed by the court to represent the members of the class. Then the case can be "certified" as a class action.
Once a case goes forward, the lead plaintiff will communicate with lawyers, testify about the harm he suffered, and potentially be asked to make decisions about the case. If there is a recovery, the lead may receives compensation for these services.
Securities class action cases are rarely if ever litigated.
This blog is an excerpt from Julie's weekly column (Dec. 2, 2016). To request a full version, email email@example.com.