What Is a Securities Fraud Class Action Lawsuit?

Many people have a general understanding of class action lawsuits as a way for large groups of people to hold someone, usually a company, accountable for its misdeeds. They are frequently used in environmental degradation and product liability cases, where individual claims might be difficult or expensive to prove.

The law has established a specific form of class action lawsuit with unique rules for smaller investors who were victimized by investment fraud. If you are wondering what a securities fraud class action lawsuit is, and how can it help you, contact Silver Law Group to learn more.

Securities Fraud Is Common

Investors are vulnerable to people who want to profit at their expense. Stock buyers rely on information about a product’s utility and a company’s financial position when deciding whether to buy or sell. Investors in funds need accurate data about past performance, and reliable information about liabilities and business projections.

Unfortunately, it is very easy for unethical people to fail to disclose relevant information or make inaccurate disclosures. Securities fraud is not always perpetrated by obvious scammers. Company executives, outside accounting firms, and others sometimes commit or abet a fraud by helping disseminate disinformation.

Although you can bring an individual lawsuit when you are defrauded, that’s not always a cost-effective option unless you lost a significant sum. Recognizing that smaller investors often lack a remedy to hold fraudsters accountable, federal law permits class action lawsuits to combat investment fraud and secure reimbursement for victimized investors. Silver Law Group represents large and small investors in actions against company executives, Boards of Directors, accounting firms, law firms, banks, and brokers who acted fraudulently.

Class Action Inclusion Is Usually Automatic

In a typical securities fraud case, many people will have made investment decisions based on the same misinformation. When more than one investor files a lawsuit seeking compensation based on the same facts, the first to file must publish a notice in a national publication describing the lawsuit. Anyone seeking to be the lead plaintiff in the lawsuit must apply to fill that role within 60 days of the publication date.

The lead plaintiff, or named plaintiff, is usually the person or entity that lost the most in the fraud. They must adequately represent the interests of others who lost money and will engage the law firm that manages the lawsuit.

Everyone else who bought or sold the securities within the class period—the period between when the misinformation was disseminated and when it was revealed or corrected—can be included in the lawsuit. Their inclusion is automatic if the court rules that they suffered losses based on the same facts that caused the lead plaintiff’s losses.

How the Process Unfolds

The parties usually engage in negotiations to settle the matter, sometimes using a mediator. When they reach a preliminary settlement, all the investors who are members of the class will receive a notice of settlement. In many cases, the settlement will provide compensation for at least a portion of the investor’s losses.

An investor who is unhappy with the settlement can present their objections at a court hearing. If the judge approves the settlement, investors have an opportunity to opt out and pursue individual claims.

Contact Silver Law Group About Securities Class Action Lawsuits

Class action lawsuits provide access to the legal process for investors who were the victim of fraudulent practices. Individual lawsuits might not be a practical option, but participating in a class action requires little of the investor.

Silver Law Group has had enormous success representing investors in securities fraud class action lawsuits. We can represent you, regardless of where you live in the U.S., so reach out today to learn more.