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Class Action

A “class action” is a lawsuit brought by one plaintiff (or a small group of plaintiffs) on behalf of all persons who are situated similarly to the plaintiff (i.e., the “class”). In a class action, the plaintiff works with class action attorneys to prosecute the action against the defendants, and the class may take part in any settlement or judgment against the company that the plaintiff obtains.

For securities class actions, membership in the class is usually defined according to a certain time period or stock offering. Typical class definitions include: “all investors that purchased the company’s securities between mm/dd/yyyy and mm/dd/yyyy” or “all investors that purchased the company’s securities in the IPO.” Investors that meet the class definition are automatically included in the class action. However, class members have the right to opt out of the class action and pursue a claim against the company individually (for more information on opting out, see the Direct Action/Opt-Out page). Class members interested in working directly with the securities fraud attorneys, and being a “class representative,” may request that the court appoint them as such. Typically, the request must be made within two months after the class action is initiated, and the court will usually appoint the investor with the largest financial loss to be the class representative.

For investor suits under the federal securities laws, the class action device provides substantial benefits.

First, class actions provide greater leverage to investors. While publicly traded companies may have thousands or hundreds of thousands of investors, some with small losses and some with large losses attributable to the company’s misconduct, the class action device allows all members of the investor class to collectively pursue compensation for their losses at the same time, represented by the same attorneys. As such, the company faces a much larger potential judgment than it would if it were defending itself from a handful of much smaller claims. This can drive the company to the negotiating table, and increase the likelihood of a recovery for investors.

Second, class actions make claims by smaller investors economically feasible. While investors with small losses are unlikely to hire securities attorneys and pursue actions against companies on their own due to the high cost associated with hiring experienced securities fraud attorneys, it costs investors virtually nothing to be members of an investor class. The costs associated with litigation are borne by the class action attorneys and their firm, and the attorneys’ legal fees are covered by a portion of the proceeds of any settlement or judgment they may obtain. As such, class members with relatively small losses may have their rights vindicated at practically no personal cost.

The securities class action attorneys at Glancy Prongay & Murray LLP have substantial experience pursuing class actions on behalf of injured investors. If you would like more information about filed class action cases, or ongoing investigations into potential class actions (listed on our website here), please reach out to Glancy Prongay & Murray LLP, as we are happy to answer your questions.

Court Recognition

“And without question, the Court is of the opinion that the value of benefit that’s been conferred to the class is extremely sizable and that this Court is certainly aware that the skill and efficiency of plaintiff’s counsel is what attributed to this settlement, and they are learned securities counsel. The Court is mindful of that, and as a result they were able to sort of weed their way through the complex issues in this case, and also to bring this about — bring about a settlement rather in short order as these matters go. So the Court certainly attributes that to counsel’s skill and efficiency, as well as the ability to work with the adversaries in this matter.”

–Hon. Susan D. Wigention, U.S. District Judge, District of New Jersey

“Class Counsel has conducted the litigation and achieved the Settlement in good faith and with skill, perseverance and diligent advocacy”

— Hon. Donovan W. Frank, U.S. District Judge, District of Minnesota

“The court finds that the Settlement Fund… created by Class Counsel is an exceptional result… The settlement is significantly above the average securities class action settlement when measured as a percentage of losses recovered… The court finds that Class Counsel, particularly Co-Lead Counsel, exerted tremendous effort on behalf of the class in the prosecution of this action… The Court finds that Class Counsel skillfully prosecuted this action, particularly given that this case was unusually complex relative to most securities fraud class actions. ”

–Hon. Dickran M. Tevrizian (Ret.), U.S. District Court Judge, Central District of California

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