Understanding Securities Laws

Securities Class Action FAQs

What is a Lead Plaintiff?
A Lead Plaintiff is a representative person(s) or party appointed by the court, who stands in for and acts on behalf of the other class members in the litigation. To appoint a Lead Plaintiff, a court must determine that the proposed plaintiff’s claims are typical of those of other class members, and that this plaintiff will adequately represent the interests of the class as a whole. Under certain circumstances, more than one class member may serve as Lead Plaintiff. The Lead Plaintiff has control over the course and direction the litigation will take.

How does the court determine who will serve as Lead Plaintiff?
The Private Securities Litigation Reform Act of l995 provides that the most adequate Lead Plaintiff is the person or group of persons who, in the determination of the court, has the largest financial interest in the relief sought by the class. The “largest financial interest” can be determined by courts in a variety of ways. Some courts appoint the Lead Plaintiff based on the dollar amount of the loss due to the securities law violations alleged, and some base this decision on the percentage of net worth lost. Also, depending on the circumstances, several individuals may be appointed to serve jointly as Lead Plaintiffs.

What is a securities class action?
A securities class action is a lawsuit brought on behalf of a group of investors who have suffered an economic loss in a particular stock or security as a result of fraudulent stock manipulation or other violations of securities laws. Such cases are brought by one or more investors in the stock, known as “Lead Plaintiffs,” on behalf of all others who have suffered financial losses as a result of purchasing shares in a company during the period of time the fraud or securities laws violations artificially inflated the value of the stock (known as the “class period”).

What is a “class period” in a securities case and how is it determined?
The “class period” is typically the time frame during which it is believed the alleged fraud or other securities law violations artificially inflated the price of the stock at issue in the case. Only those persons who purchased stock during this period are included in the class action suit. The class period is initially determined by plaintiffs’ counsel after extensive research and investigation. Sometimes the class period changes during the course of the litigation based on additional information uncovered during the discovery process.

What is the “Lead Plaintiff Deadline”?
The “Lead Plaintiff Deadline” is a sixty day period after a securities class action has been filed within which applications for Lead Plaintiff must be filed. If you wish to be a Lead Plaintiff in a particular case, you must contact Donovan Litigation Group, LLC at least five business days in advance of this deadline.

I missed the sixty day Lead Plaintiff Deadline. What should I do?
If you purchased your shares during the class period and sustained losses you are automatically part of the class action. The sixty day deadline applies only to those seeking to be Lead Plaintiff.

How are the attorneys paid in securities class action cases?
The attorneys are usually paid in accordance with an order from the court in which the case is pending, and only if the case is successful. The judge responsible for the class action reviews a submission made by the attorneys, called a “fee petition.” This petition sets forth in detail the work the attorneys have done on behalf of the class. The court then enters an order establishing the percentage of the settlement to be paid to the attorneys.

What kind of recovery can I expect?
Until the litigation is well under way it is impossible to determine what recovery, whether by settlement or following judgment at trial, might be possible. Many cases do settle, however. Typically a settlement consists of a payment of cash, stock, or a combination of both to a common fund to be distributed to the class in proportion to the amount each class member is determined to have lost. The maximum possible recovery, which is rarely attained, is the amount of loss attributable to the illegal conduct, less attorneys fees and costs.

How long does a securities class action usually take to settle or resolve?
The typical securities class action case takes approximately three to five years from the time the initial complaint is filed until a case concludes either with settlement funds distributed to stockholders, or by judgment or dismissal. This is only an estimate; some case have taken longer, especially when there are appeals, while others have taken significantly less time to resolve.

Can I sell my stock in the company being sued and still be a class member?
Yes. It is not necessary for you to retain ownership of the stock after the class period has expired to participate in the lawsuit.

Do I need proof of my ownership of the stock, and what is the best form of that proof?
Yes. While the best evidence of ownership are the confirmation slips received when you purchased the stock, you may also use your brokerage statements indicating when you bought the stock and at what price. You should be sure to keep these records in a safe place. You may need to submit them to the claims administrator after the case has been resolved. You will receive notification by mail when it is time to send in this documentation.

If more than one law firm filed a lawsuit related to the same underlying securities violations, do I need to contact all of them?
No. Where more than one case has been filed on behalf of a class, the cases will eventually be consolidated by the courts. You should not retain multiple law firms to represent you for the same claim. You cannot improve the amount of any recovery by retaining more than one law firm.

Will I be kept informed during the course of the litigation?
You will be notified either by mail or email of any significant developments during the course of the litigation.

How can I discuss a potential class action or a pending case with an attorney?
If you wish to discuss your situation in complete confidence, simply call 610-647-6067 during regular business hours and you will be connected with an attorney who can help you. Donovan Litigation Group, LLC attorneys will discuss a pending case, or, if warranted, investigate a possible class action that has not yet been brought, free of charge.

If I have information relative to a pending case, what should I do?
If you believe that you have information relative to a pending case, call 610-647-6067 to speak to an attorney in confidence.

I am a small investor. What should I do?
As a small investor your rights are as important as those of larger investors. Where your losses are a significant proportion of your net worth, it may be appropriate for you to seek lead plaintiff status. Therefore, you should call 610-647-6067 to speak with an attorney.

Why should I choose Donovan Litigation Group, LLC to represent me?
Donovan Litigation Group, LLC has extensive experience representing plaintiffs in class action securities litigation and has played a lead role in numerous cases, particularly those in which hedge funds and other specialized institutions have had significant investments. The expertise and experience of Donovan Litigation Group, LLC in successfully conducting securities and other complex litigation has been recognized by courts throughout the country.