What is a securities class action?
A securities class action is a class action filed by investors who purchased a company’s debt or equity offering within a specific period of time known as a “class period” and suffered economic injury as a result of a significant negative public disclosure about the company during that class period that caused a serious drop in the company’s stock price. Securities class actions generally are brought under the anti-fraud provisions of the federal securities laws including the Securities and Exchange Act of 1934 and the Securities Act of 1933.
A securities class action is a class action filed by investors who purchased a company’s stock, which then declined in value due to fraud or other malfeasance on the part of the company and/or its officers and directors. In a typical scenario, the company will have failed to disclose material adverse information, or will have overstated revenues or earnings, keeping the share price artificially high. Securities class actions generally are brought under the anti-fraud provision of the federal securities laws including Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 and the Securities Act of 1933.
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”).
A securities class action is a lawsuit that is brought on behalf of a group of investors who lost money because of claimed violations of the securities laws. Often such cases allege a series of false and misleading statements regarding a company’s business that caused the company’s stock to trade at higher prices than it otherwise would have. In other words, investors never would have paid as much as they did for the stock if they had known the truth about the company’s business. Typically, it is more efficient for investors to pursue their claims as part of a class, rather than pursuing an individual claim.
Related Questions
- I am a member of the class of plaintiffs in the GM Securities Class Action Case. Where can I obtain more information concerning the status of that case and any settlement distributions?
- What is the difference between a securities class action and a shareholder derivative suit?
- How long does a securities class action take to be resolved?
