1.What is a Class Action?
A class action lawsuit is a type of case where one or more people can bring a lawsuit on behalf of themselves and other similarly situated people who were harmed by the same actions. Usually, a class action is brought against a company for unlawful conduct such as committing securities fraud or consumer fraud. Securities fraud means the company defrauded its own stockholders, causing them to lose money in their investment in the company. Consumer fraud occurs when a company cheats its own customers.
2. Does it cost me anything to start a class action? Or to join one?
Should you retain the Thornton Law Firm, you will never have to pay anything out of pocket. Thornton Law Firm will advance all the costs and expenses of the lawsuit, and they are only paid if you and the rest of the class obtains a recovery in the case. If you and the class do not get a recovery, the lawyers will receive nothing.
3. What is securities fraud?
Securities fraud occurs all too frequently in our country. Public companies and their senior officers frequently make misstatements to the public regarding a company’s finances or its operations that mislead investors into thinking the company is in better shape than it really is. But ultimately, the truth always ends up coming out. Companies can only hide the truth for so long. When the truth does come out, it usually causes a company’s stock to decrease significantly in value. This happens because the market is surprised by news that contradicts what it was previously told by a company or its officers.
4. When does Securities Fraud take place?
Securities fraud can happen at any time: when a company first issues stock (in an initial public offering also known as an IPO), when a company files quarterly or annual reports to the SEC, in press releases, in public statements by officers, and myriad other times. In the 1930s, in response to the Great Depression, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. These two laws provide the primary basis for investors to recover losses caused by securities fraud.
5. How does securities fraud harm investors?
Investors and the market rely on the integrity of a Company’s public statements in deciding to invest in it. When a company and its officers lie to investors and the market, this causes investors to lose money by no fault of their own. Not only do investors lose money, but you also lose confidence in the stock market and in the companies that you invest your hard-earned money in.
6. Why are securities class actions a good thing?
Securities class actions serve two very important functions: first, they are a way for investors to recover losses caused by fraud. While everyone who invests in the stock market understands that there will be ups-and-downs in the normal course of investing in a company, securities fraud artificially destroys the value of a company’s stock.
Second, securities class actions serve as an important deterrent to fraud. Companies and their senior executives are less likely to commit securities fraud knowing that experienced, successful litigators like Thornton Law Firm will prosecute fraud claims against them.
7. If I own stock in a company, can I be part of the securities class action lawsuit against it?
If you purchased or acquired stock during the “Class Period,” which is the period of time during which a company is alleged to have misled its investors, then yes. You have two options: you can participate in the class action as a lead plaintiff, ensuring that you have a say in how the case is ultimately resolved against the company. You can also remain as a passive member of the class, but your ability to have a say in how the case is conducted or resolved would be limited.
8. If I acquired stock in a company via an IRA, 401(k), or other investment account, can I still participate?
Generally, yes. Contact us to discuss if your investment qualifies.
9. Who is the lead plaintiff in a securities class action?
The lead plaintiff is the individual (or group of individuals) who seek to serve as the class representatives. In this role, you help direct the litigation and ultimately work with your lawyers to determine how the case should proceed and whether a potential resolution should be accepted (such as a settlement offer).
10. Should I serve as the lead plaintiff?
If you acquired or purchased stock in the company during the Class Period, then you should consider serving as the lead plaintiff. It is an important role, and while it won’t take very much of your time, it will greatly assist in helping obtain the best recovery for the class. Investors who serve as lead plaintiffs help ensure that securities litigation continues as a successful deterrent against future fraud, and in the short-term, maximize any potential recovery on behalf of defrauded investors.
11. What are the responsibilities of a lead plaintiff?
A lead plaintiff supervises the litigation and assists the attorneys in making key decisions during the lawsuit. This includes deciding whether to file a complaint, whether to accept a settlement offer, and other major decisions.
12. Can I sell my stock in the company and still take part in the lawsuit?
In most circumstances, you can, but you should always confer with your counsel regarding the implications a sale could have on your case, and of course your financial and tax advisors for other considerations.
13. If I serve as the lead plaintiff, will I be paid to do so?
Generally the Lead Plaintiff obtains the same pro rata share of the recovery that the rest of the class obtains. You may also qualify for payment of a service award, to be decided by the Court, to cover such things as lost wages.
14. Will I have to testify in court if I’m the Lead Plaintiff or Class Representative?
It’s very unlikely. You might have a deposition where you’d be asked certain questions about your purchase or sale of the securities at issue, or your decision to get involved in the lawsuit.
15. If I live outside the United States, can I still be part of the lawsuit?
Yes. If the security was purchased and sold on a U.S. exchange, such as the NYSE or NASDAQ, then a foreign citizen can typically serve as the Lead Plaintiff.
16. How do the lawyers representing the investors get paid?
Attorneys who prosecute securities class actions only get paid if the Class obtains a recovery. If the Class doesn’t get anything out of the lawsuit, then the lawyers get nothing. The fees paid to attorneys are usually taken out of the proceeds obtained on behalf of the entire class. A judge will have to sign off on the payment of any attorneys fees in a securities class action.