When corporate misconduct or misinformation leads investors to lose money, a securities fraud class action lawsuit often results. Although some cases go to trial, most cases that move forward end in settlements.
Settling a securities class action lawsuit is a complex process. Although you may have no involvement in the litigation if you are a small investor, you will have an opportunity to approve the settlement or opt out and pursue an individual claim. Talk to the attorneys at Silver Law Group if you have questions about whether accepting a securities class action settlement is the right strategy for you.
Settlement of a class action securities lawsuit is usually a desirable result from everyone’s perspective. Settlements free the court to hear other lawsuits, provides the defendant with certainty, and allows the plaintiffs to collect their money sooner and avoid further litigation expenses.
Settlement negotiations in securities fraud cases can be complex. In many cases, the parties will work with a mediator to reach a settlement. The negotiations can go on for months or even years.
Final settlement agreements usually involve the defendant paying cash, stock, or a combination into a common fund for distribution to investors who lost money. The agreement usually contains a provision that a certain percentage of investors must approve the settlement for it to become final. The parties submit the proposed settlement to the court for preliminary approval.
When the court gives preliminary approval to the settlement, the investors who purchased the stock during the class period will be notified. The notification will include details of the settlement including the total amount of compensation the defendants will pay, the reason for the settlement, and the contact information for a plaintiffs’ attorney who can answer questions. It typically contains a form plaintiffs must complete and submit to participate in the settlement.
The notification must also provide a deadline for the investor to submit objections or opt out of the settlement. The court will hold a hearing sometime after the deadline has passed, and parties who object to the settlement can present their arguments at the hearing. After the hearing, the court will either reject the settlement or give it final approval.
If the court approves the settlement, the investors who returned their claim forms and did not opt out will receive their funds, usually within a few months to a year. The settlement funds are distributed to participating investors on a pro rata basis according to the amount they lost due to the defendant’s misconduct.
Participating in the class action settlement is the right decision for many investors. Although they are unlikely to recover all their investment, they will recoup a portion of their losses. However, opting out may be the right option for institutional investors and some individual investors. Pursuing an individual claim allows the plaintiff to pursue legal theories specific to their claim, but not the rest of the class. In some cases, state laws might provide a remedy that is not available under the federal securities laws.
The decision about whether to accept a class action settlement or pursue an individual claim requires analysis of multiple factors. The attorneys at Silver Law Group can explain the ramifications of each option and help you choose the one that is right for you.
Settling a securities class action lawsuit often requires intense negotiation over years. For many investors, accepting the settlement is the best choice. For others, there might be advantages to objecting to the settlement or opting out entirely.
Silver Law Group attorneys have extensive experience representing investors like yourself who were taken advantage of. We can help you decide the best way to proceed.
