FREQUENTLY ASKED QUESTIONS

A class action is a type of lawsuit that allows a person or entity to initiate and prosecute a representative lawsuit on behalf of other similarly situated persons or entities. It is frequently used when numerous people have been similarly affected by a company’s unlawful conduct. Class actions may be especially useful for people with relatively small economic losses that would not justify the hiring of a lawyer to pursue only their own claim. A class action cannot be prosecuted unless at least one person harmed by the conduct decides to act as a class representative.

Securities class actions are typically initiated in order to recover for damages suffered by investors when a corporation or its management has misrepresented (or failed to disclose) important facts about the business or financial condition of the corporation which probably had the effect of making the price of the security higher than it would otherwise have been.

If you purchased stock during the class period, then you are an investor for whom we are trying to seek a recovery. If we are successful, you will be eligible to share in the recovery.

A class period is the period of time in which a company is alleged to have been engaged in improper conduct. The attorneys investigating and prosecuting the case will review the facts of the case and determine when the class period begins and ends. Sometimes, after an initial complaint is filed, a class period will be lengthened or shortened.

Yes, but only those shares purchased during the class period will be the subject of the litigation. At times, however, the class period may be extended which would include shares purchased in the extended time period. If you hold shares purchased prior to the proposed class period, please contact our office to discuss your ability to bring a shareholder derivative action.

No. As long as you purchased during the class period, you can participate in any recovery on behalf of the class, even if you sell the stock after the class period ends. However, by holding at least one share of the stock, you are able to bring a shareholder derivative action. Please contact our office to discuss this type of action.

Yes, if the shares were acquired during the class period. You also may be eligible to bring an ERISA claim in the event you purchased shares in the Company’s 401(k)plan. In the event you purchased shares in the Company’s 401(k) plan, please contact our office to discuss bringing this type of claim.

If your overall investment in XYZ stock during the class period resulted in a loss (realized or not), you may participate in the lawsuit. If you made money on the stock overall, then you are not eligible to participate in the class action.

A lead plaintiff is a person, group of persons, or entity that is appointed by the Court to represent the interests of all class members. The lead plaintiff generally has the largest financial interest in the outcome of the case. The lead plaintiff works with the court-appointed lead counsel in determining how the litigation should proceed and eventually be resolved.

Yes.

Yes, as long as you purchased shares of the Company during the proposed time period of the class.

Each case is different, however on average, the litigation takes approximately 2-4 years before it is resolved, and sometimes lasts even longer. There are several stages of litigation each can be summarized as follows:

1. Approval of lead plaintiffs and lead counsel – within 60 days of the notice of the first securities class action against a company, any class member may seek to be appointed by the court as the “lead plaintiff” and may seek court approval to have his attorneys appointed as “lead counsel,” decisions which are to be made within 90 days of the filing of the initial complaint or as soon thereafter as is reasonable.
2. Filing of an amended complaint – Following the appointment of the lead plaintiffs and approval of lead counsel, plaintiffs and their counsel are generally ordered to file an amended complaint setting forth plaintiffs’ most current and complete description of the facts underlying the litigation. This generally occurs 30-45 days following the appointment of lead plaintiffs and approval of lead counsel.
3. Defendants’ motion to dismiss complaint – Defendants invariably file a motion to dismiss the Amended Complaint on legal grounds as the mere filing of a motion to dismiss “stays” (stops) all formal discovery (i.e., the production of documents by defendants and the depositions of defendants’ key witnesses). A motion to dismiss will generally be filed by the defendants within 30-45 days following the filing of an Amended Complaint. The Court will issue a decision when it is ready and there is no way to predict how long any particular Judge will take in rendering a decision.
4. Class certification and notice – Plaintiffs must file a motion to certify the proposed class in order for the lawsuit to be certified by the Court as a class action. In securities cases, courts generally will certify a class of purchasers for the period of time in which the defendants made similar representations or failed to disclose the same critical information. Although courts may take up the class certification issue soon after the case is brought, this issue is generally not addressed until after any motion to dismiss is resolved. Following certification of the class, a notice will be sent to all class members (by mail, through the same channels that bring shareholders their quarterly and annual reports) notifying class members of the class action and of their right to be excluded from the class action.
5. Discovery – Once the court has determined that the plaintiffs may proceed to prove the misrepresentations set forth in the Complaint, plaintiffs’ counsel will seek to obtain documents and deposition testimony from defendants and additional persons and entities (“third parties”), a process known as “discovery”. Discovery can take months or years, but generally is conducted pursuant to a time limit discussed by the parties and set by the court. As these cases are complex, it is common for the discovery process to last at least a year, and often an additional short period is necessary for the discovery of “experts” (including those who will testify about the conduct of defendants or about the impact of the misrepresentations on the market price of the stock).
6. Settlement – Settlement may be discussed and/or achieved by the parties at any time during the litigation. Generally, cases most often reach a settlement posture approximately two years after they are filed, although some cases settle earlier and some cases only settle later or not at all.
7. Settlement notice and hearing – In the event of a settlement, the court will schedule a hearing, and all class members will receive a notice (by mail, through the same channels that bring shareholders their quarterly and annual reports) of the settlement and of a hearing at which the court will consider approval of the settlement (a summary form of this notice will also be published, generally in the Wall Street Journal). The settlement notice will also include a “Proof of Claim” form (see below).
8. Trial – Although very few civil cases ever go to trial, a securities fraud class action that does not settle will probably be ready for trial anywhere from two to four years after it is filed, and may last as short as two weeks or as long as months, depending upon the complexity of the issues.
9. Appeal following trial or settlement – Following trial or settlement (if anyone has objected), any party (including an objecting class member) may appeal to the appellate court for the district in which the case has been heard. If there has been a settlement or judgment in favor of the class, the payment of funds will be delayed pending the appeal.
10. Proof of claim forms and distribution of funds – Following a settlement or judgment, the class members will receive a “Proof of Claim” form which requests information about the class members’ trades and losses, and documents to support the claim. An administrator appointed by the court will assemble all of these claim forms to determine how any funds received in settlement (or following a judgment) will be distributed to the class members. Class members are generally provided 3-4 months to assemble the documents and file the proof of claim. It generally takes the administrator about six months to process the claim forms after which we proceed to the court for a final order of distribution. Funds are then distributed to class members.

Damages are a complex legal calculation that may or may not equal your market loss. The damages paid to shareholders depends greatly on the interest of the shareholders in the suit, as well as the agreed upon settlement or court-ordered judgment. To establish damages in securities class actions, experts will calculate the monetary amount that a defendant company’s stock was artificially inflated during the class period. Experts will attempt to determine at what price the company’s stock would have traded at during the class period, absent the defendants’ improper conduct. There may have been other factors which caused the company’s stock price to decline other than the alleged fraud and this is the reason why your damages may not necessarily equal market loss. Assuming you are an eligible class member, you will receive your pro rata share of any settlement achieved.

It is typical in securities class action lawsuits that several law firms will file similar complaints. This is simply because different shareholders contact and retain different law firms to pursue the same matter. Generally, the cases will be consolidated and heard by the Court as one lawsuit, with each of the law firms participating on behalf of their clients in a capacity to be determined by the court.