If you own a particular stock during a certain timeframe sometimes you receive a letter in the mail about a class action lawsuit against that company. Does anyone here follow up on that? Sometimes you don't have to do anything to be included in the class action, sometimes you do. Has anyone received their share of a class action settlement? Is it pretty much guaranteed that you would only get peanuts, if anything? Particularly the last few years a lot of publicly traded companies have been subject to class action lawsuits.
"Fraud on the market" cases are essentially allegations by a plaintiff that management of a company made material "misstatements or omissions", which caused the stock of a company to trade at an artificially inflated price. Then, once the "truth" comes to light, the stock drops dramatically which results in investors being 'defrauded'. The whole private cause of action is esoteric and confusing, and adds just another layer of liability and hassle to public companies. In the end the only ones really coming out ahead are the lawyers.
"It is well known that approximately one third of securities class action suits are dismissed, two-thirds settle, and hardly any go to trial." http://www.law.stanford.edu/display/images/dynamic/publications_pdf/Plus Part II.pdf http://securities.stanford.edu/research.html
thanks for the replies. So as far as the two-thirds of cases that settle, has anyone here gotten a check from one of these situations? If so was it mere peanuts? I received a quite a few of these letters which are long and full of dense fine print and I wonder if I should spend the time reading them in depth or not.
I do not recall getting any money from such legal settlements and the last few years I throw them in the trash can.
Ditto. At one point it seems every stock I owned was part of a law suit. Never remember getting anything. Melvin Weiss was da man at one time for class action lawsuits. (I think he's made a comeback though, someone once brought me up to date on his firm, oh well, homey don't play dat game anymore.)