An Overview Of Securities Class Action Settlement

A Securities Class Action Settlements is the settlement of a lawsuit filed on behalf of the investors of a particular company or their shareholders. The same is filed because of the loss or damage they faced per the securities laws. In lawsuits like these, instead of each shareholder being able to bring an individual action, more than one shareholder brings the action on behalf of the “Class” of shareholders against the particular companies or the people who are being sued for violation of securities laws and have caused legal injury to those shareholders.

The benefit of such class actions

The significant benefit of such a Securities Class Action Settlements is that they provide only means to seek compensation for the injured shareholders and investors. They cannot afford to carry out the prosecution process. Usually, these class actions are expensive, especially to litigate massive companies. If one goes for individual litigation, it will be difficult for the investors to afford. For this reason, a class action is the best option the investors can choose for themselves.

The litigation process of these class actions takes place in federal and state courts throughout the USA. In addition, many attorneys and law firms are available throughout the country to help one in litigation like this.

What is a class?

A class refers to those people who are the purchasers of a company’s securities during a particular time. This period is referred to as the “class period.” If one purchases securities at this time and ends up sustaining losses, they will be considered a member of that class. However, even when a person is a member of one class, they may not have to go for direct participation when it comes to recovery on behalf of the class.

Time for resolution

The period between filing an initial complaint and the Securities Class Action Settlements varies substantially. It depends on the complexity of the case and the number of cases on a judge’s docket, among other factors. However, a typical securities class action usually lasts three years or more. Because any potential trial judgment settlement may take some time, one needs to save evidence of their sales and purchases of the securities so they may share in any recovery.

Under federal securities regulations, an investor will generally be able to recover just the percentage of their losses caused by deception or fraud. However, the amount for recoverable damages will have a lot of differences, and the same is entirely dependent on the facts and the interpretation of a damages expert. Members of a class are usually entitled to a pro-rata basis (proportional to total losses) share of recovery based on their recognized loss as per the evaluation of a damages expert.


Nowadays, the shareholder class’s rights are fundamental in securities laws. There are a lot of judicial precedents that are in favor of shareholders as opposed to the massive corporation. With the advent and the rise of shareholder activism, the same is possible, and a lot of different firms and independent attorneys are there to help the investors and shareholders in matters like these.

Manolo Hilton
the authorManolo Hilton