Investors who have been cheated out of significant funds because of fraud or other misconduct often join class action lawsuits. These are legal actions where many defrauded individuals join in a single lawsuit to obtain compensation from the named defendants. Anyone who believes they suffered financial losses due to corporate fraud or misconduct should contact our securities fraud class action attorneys at Silver Law Group.

The people who were defrauded are called the plaintiffs, while the corporation, members of its board of directors, or auditors are the defendants. This lawsuit must be filed under the names of one or more lead plaintiffs. The process to determine the lead plaintiffs in securities fraud class action cases is complex, so it’s important you work with our experienced securities fraud lawyers who are committed to your success.

Filing Suit Alleging Securities Fraud

Class action securities fraud lawsuits don’t start out as class actions. Instead, one person who feels they were defrauded hires an attorney and files a lawsuit in the appropriate federal District Court. The Complaint generally alleges how the company or other defendants violated the federal securities laws and the claims being made against the defendants.

Frequently, many lawsuits seeking compensation from the same defendants are filed around the same time. The Private Securities Litigation Reform Act of 1995 allows courts to consolidate all cases alleging securities fraud during a specified class period against a single defendant. This process is far more efficient for the court system and reduces the expenses involved for all plaintiffs.

Selecting the Lead Plaintiff in a Class Action

When there are multiple lawsuits alleging losses due to a violation of the securities laws during the same period, courts have a procedure for determining which plaintiff will be the lead plaintiff. The law requires the first plaintiff to file suit to publish a notice about the filing in a business publication with a national audience. Their attorney must publish the notice within 20 days of the filing.

Other plaintiffs who have filed suit across the country then generally have 60 days to file a motion requesting to be the lead plaintiff in the case. Within 90 days of the publication of the notice, the judge usually decides who will be the lead plaintiff. In general, the lead plaintiff will be the investor or group of investors who suffered the largest losses and thus has the most at stake in the class action lawsuit.

Once a lead plaintiff is determined, the judge will consolidate the cases and the plaintiffs will file a motion to certify the lawsuit as a class action. If the judge certifies the class and the lawsuit survives a defendant’s motion to dismiss and other pre-trial hurdles, the lead plaintiff will present their case at trial. If they win, all the plaintiffs will share in the verdict or settlement.

Benefits of Being the Lead Plaintiff

The lead plaintiff selects the law firm that manages the lawsuit. They have the right to participate in the case, comment on court filings and be involved in strategic decision-making. However, the lead plaintiff generally does not bear any of the expenses of the litigation which are paid by the law firm handling the case.

When the defendant engages in settlement negotiations, the lead plaintiff frequently has input into the size of the settlement and the form it takes. The lead plaintiff in a securities fraud class action usually approves any settlement before it’s presented to the court. They are consulted on the amount of attorney’s fees their counsel claims if they win a settlement or verdict, although the court must approve the fees.

The lead plaintiff is also a fiduciary duty to the other members of the class: their decisions must reflect the best interests of all class members, not just their own. Although there are responsibilities with being the lead plaintiff, having control over litigation in which they have a substantial stake amongst other factors can incentivize someone to apply to be lead plaintiff.

Contact Silver Law Group To Be Potential Lead Plaintiff In A Securities Class Action Case

Lead plaintiffs do not receive proportionally bigger settlements than others in a securities fraud case. However, they do have more control over the process, which is an attractive inducement to investors with a lot at stake in the litigation.

Lead plaintiffs in securities fraud class actions play an important role and have significant involvement over any settlement. Contact Silver Law Group today if you’re interested in applying to be a lead plaintiff in an active class action claim involving securities fraud.