What is a class action?
A class action is a lawsuit that is brought by one or more representative plaintiffs on behalf of a group of people whose claims against common defendants arise from essentially the same facts or circumstances. Because securities fraud, generally speaking, affects all shareholders in essentially the same way because of the defendants' common course of conduct, securities class actions are ideally suited for class action treatment.
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What is a class period?
A class period is a period of time during which plaintiffs claim that defendants defrauded and damaged investors who purchased the company's securities. When companies commit securities fraud, the price of the security is artificially inflated by the fraud. Then, when the truth is later disclosed, whether partially or completely, the inflation in the security is let out, just like air is let out of a tire. In securities class actions, those persons who bought during the time a company defrauded the market and suffered an out-of-pocket loss (i.e., the price to which the security fell after the disclosure of the truth was less than the price for which the person paid for the security) are putative class members.
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' Why are differing class periods sometimes alleged?
Plaintiffs' attorneys may have different theories about the proper extent of a class period or for what period of time damage can be recovered. Thus, at the beginning of a class action, it is not uncommon for differing class periods to be alleged. Ultimately, the lead plaintiff(s) and the court will sort out the class period that will govern. Typically, approximately two to three months after the first class action arising out of a Defendant's common course of conduct is announced, the district court consolidates all related proceedings. Thereafter, the district court appoints a lead plaintiff or a small group of co-lead plaintiffs and their counsel to direct the consolidated proceeding. The lead plaintiffs and their counsel will then file a consolidated complaint, which becomes the operative pleading for the putative class. In the consolidated complaint, lead plaintiffs will allege what they believe is the proper class period. Defendants may still challenge the proposed class period. Any differences in the class period are subject to the court's review, and if the case is certified by the court as a class action, the court will define the class period.
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How do I know if I am a class member?
You are a putative class member if you purchased securities during the class period and suffered damage as a result of the defendant's fraud. Under the federal securities laws, you have compensable damages if you bought securities during the class period and sold them or held them at a price less than the price you paid for the securities. Many courts require you to have sold the securities after or to have held the securities through at least some disclosure of the truth, which caused the price of the security to fall below your purchase price.

If varying class periods are alleged at the outset of a suit, you will know whether you are likely a class member, but ultimately you will not know if you are a class member until a class is certified by the court, either at the settlement stage of the case or the class certification stage. Most of the time, if you have reason to believe you are a class member at the outset due to the notices published announcing a class action, you probably are.
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What are my options if I believe I am a class member?
You have several options. First, you can retain counsel, whether it is Motley Rice LLC or any other firm. We believe there are many reasons to retain counsel. One of the most important reasons is to ensure you receive notification if a settlement is recovered in the case. If you are unaware of a settlement, you may not submit your proof of claim form on time. If you retain counsel, your counsel can help review your specific transactions and assess whether there are additional claims you may assert to maximize your recovery. One of the options, if you retain counsel, is to move for appointment as a lead plaintiff. Lead plaintiff appointments are discussed below. There are additional benefits that we would be happy to discuss with you.

Second, you may do nothing and remain an absent class member. An absent class member is someone who does not come forward and identify themselves as a member of the class. Absent class members' interests are still represented in the litigation, and they may file a claim with the claims administrator if the case results in a settlement. One of the issues or drawbacks, we believe, with remaining an absent class member is that claims administrators may not be able to identify all of the class members. If they cannot identify you as someone who may be eligible to recover from the settlement fund and cannot find you, you miss sharing in any recovery obtained becuase you remain unaware of its existence.

Third, you can opt out of the class action by filing an individual action. If you are considering opting out, we recommend that you seek legal counsel to discuss the costs and benefits of doing so. We also recommend that you get advice on any applicable statutes of limitations or opt out deadlines that may apply.
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How much does it cost to retain counsel?
All work we perform on behalf of the class is done on a contingent basis, and we advance all expenses at our risk. If we are unsuccessful, we would earn no fee, and you would owe us nothing. The only award that Motley Rice LLC earns in a class action case, if any, are court-awarded fees and expenses, or a portion thereof deducted from the total class recovery, to Plaintiff's Counsel or Lead Counsel in the case for work done on behalf of the class. The amount of the award depends on a number of factors, including the complexity and duration of the litigation and the size of the recovery.
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What does it mean to be a lead plaintiff in a federal securities class action?
A lead plaintiff is a person or a small group of persons (typically 3-5 class members) that represents the class and supervises counsel. The lead plaintiff gives the class a face, humanizing the victims of securities fraud. The lead plaintiff chooses lead counsel, subject to the court's approval, and is the primary client to whom the lead counsel reports. Importantly, the lead plaintiff also gets to vote on how the case resolves. Both the lead plaintiff and the lead counsel serve in a fiduciary capacity and must act in the best interests of the class they represent. The lead plaintiff must demonstrate that it lost money due to the securities fraud at issue and that it is adequate and typical. We are happy to discuss these requirements with you in more depth and explain how the court selects a lead plaintiff.
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May I respond to all the press releases by different law firms that I see announcing the filing of related actions?
You are free to contact as many firms as you like. However, we believe that retaining more than one law firm is confusing and potentially problematic, and we do not want to be engaged by anyone who is represented by another firm. Hiring more than one firm for the same problem can, in our opinion, result in conflicting and sometimes inconsistent filings that we believe would not inure to your benefit.
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Does it matter if I bought in an offering?
Yes. Please let us know if you lost money on stock that you purchased in an offering. There may be claims available to you and similarly situated people that should be brought in the litigation under the Securities Act of 1933 (the 33 Act). These claims, if viable in the particular matter for which advice is sought, are not fraud-based as claims brought under the Securities Exchange Act of 1934 (the 34 Act) are and thus these 33 Act claims often result in a better recovery for you than 34 Act claims do.
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Does it matter if I sold the securities? If I hold them now, can I sell the securities later?
Unlike in a derivative action, in a securities fraud class action, it does not matter if your loss is realized or unrealized. In other words, so long as you bought during the class period and suffered a loss on your securities due to the defendants alleged fraud (measured by the securities sale price or retained value being less than the price which you paid for the security), you are a member of the class. Your loss is realized if you sold the security and have locked in your loss. Your loss is unrealized if you still hold the security. If you hold the security, you can sell it at any time you want. If you later sell it for a profit or you mitigate your damages, that could reduce your recovery in the suit, but you can still sell the security if you want to.
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How long does a securities class action typically take from start to finish?
There is no hard and fast timeline for lawsuits. The length of time the suit takes depends on a variety of factors. A suit could take one to two years to conclude, and suits have been known to take more than six years to reach resolution. The average length of a suit is approximately two to four years.
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Do I need to stay in touch with counsel during the class action proceeding if I am not a lead plaintiff?
If you are our clitent, it is very important for you to update your contact information if you move, change emails or phone numbers, etc. Otherwise, you do not need to stay in touch unless you have questions about the progress of the lawsuit, in which case we are happy to try to assist you. If you do change your contact information, please send us an email and tell us for which case you signed up with us. If you do not receive a reply that we have updated our contact information within a few days, please contact us again.
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What is a derivative lawsuit and how does it differ from securities class actions?
A derivative lawsuit is often also filed at or around the time that securities class actions are filed, though the two kinds of suits are different. Derivative lawsuits are brought in the name of and on behalf of a company whose stock was afftected by alleged fraud, when a company will not take action that it should. If you bring a derivative suit, you do have to hold the stock during the pendency of the suit, and you have to have held the stock when the fiduciary duties were breached. In a derivative suit, it does not matter what price you paid for the stock or whether you have a loss on it. The recovery in a derivative lawsuit often is in the form of corporate governance changes, and the derivative lawsuit does not result in a distribution of a settlement fund to shareholders. Any financial recovery obtained typically would belong to the corporation in whose name the suit was brought.
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If I am an employee or former employee of the defendant company, does that matter?
Yes. Please let us know if you are an employee or former employee of a defendant company, by clicking here. You may have additional claims that can be brought under the Employee Retirement Income Security Act. In addition, you may have information that is relevant to the lawsuit. Click here to contact us.
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If I am a class member in litigation that is successfully resolved, how will I receive any recovery due to me?
Once the parties reach a settlement, and the court approves the settlement, the claims administrator mails out a notice and a proof of claim form to all class members that it can identify. This notice advises class members of the deadline for submitting the proof of claim or for objecting to or opting out of the settlement. If you opt out of the settlement, you will receive nothing from the settlement. It is very important that you return your proof of claim form to the claims administrator by the deadline if you wish to participate in the settlement. Adhering to the deadline ensures that you will receive your fair share of the settlement proceeds, if you qualify for a distribution. Once the claims administrator has reviewed all of the proofs of claim and determined which ones are valid, the claims administrator will distribute checks to the claimants.

Please make sure that you retain copies of monthly statements or other records showing your transactions in the security at issue. You will need to document your loss to the claims administrator when you file a proof of claim form. Remember you will need to file a proof of claim form directly with the claims administrator in order to be eligible to receive a distribution from the settlement fund. A certification form at the beginning of the case to retain an attorney to represent you is not the same as filing a proof of claim form at the end of the case. If our clients have questions about how to file their proof of claim form, we are happy to assist them.
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Can Motley Rice assist me with other matters?
We would be honored to work with you on other matters. We encourage you to contact us about any situation in which you believe you have been wronged. We are a full service plaintiffs law firm, and we have many resources at our disposal. In addition to serving the securities fraud needs of our clients, we also have a very active practice in aviation matters, occupational disease and toxic torts, pharmaceutical litigation, catastrophic injury and medical malpractice, consumer fraud, commercial litigation, 9/11 litigation, and product liability.

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** Motley Rice LLC has attempted to provide general answers to frequently asked questions. This website, however, is not intended to give legal advice and the posting of information hereon does not create an attorney-client relationship. If you have any questions relating to your situation and desire legal advice, please contact us through our website or call 1-800-370-9534.

Please contact us with any questions or if you'd like to explore your legal rights.