Anyone here been involved in class action (or private) suit against a company accused of fraud?

D

d0rian

I recently got docs in the mail about a class action involving a company I used to own options and a small # of shares in. Their (now ex-) CEO was accused of insider trading, fraud, and a bunch of other stuff, causing stock to drop around 25%.

The mailed docs allowed me to either opt into the class (and receive a relatively small settlement), or opt out, which would preserve my ability to sue the company privately. The refund I stood to receive was tiny (after lawyer fees) so I never opted in or out.

My Q's:

1) This class action specifically only covered common shares. I owned a small amount (which is why my refund would have been so small), but I actually DID suffer larger losses on my option positions. After some research, it seems like class actions typically only cover common shares (like this one); I want to know if anyone here has pursued or been involved in a lawsuit vs a company relating to losses on options? Was it a class action (that happened to cover options) or did you pursue it privately?

2) If you pursued something privately, any tips on finding a competent lawyer specializing in these suits? Most of the law firms that quickly announce their intention to pursue a class action whenever there's negative news about a company are dime-a-dozen bottom-feeding ambulance-chaser types. Are there certain key words / specialties I should look for if I wanted to pursue this privately?
 
Robert Morse said:
typo. Costly.
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Well yes, I'm aware that the downside of going it on your own is the expense -- but as I said in the OP, the class action route (even if one decides that makes more sense for them) almost always excludes options-losses. So the private suit route would be the only one available to me. But I suppose the cost thing is an additional Q to add to the 2 in my OP:

1) Anyone pursue an options-losses suit against a company?
2) Tips on finding a lawyer for same?
3) If anyone explored the private suit route, what approx costs were you quoted? (I know many lawyers will take these cases on contingency, though that may be at odds with the competent qualification I'm looking for...I"m just not sure.)
 
fan27 said:
How much money did you lose?
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Hard to say, since calculating losses -- and more specifically determining what % are attributable to company malfeasance is a notoriously difficult issue -- but somewhere in the 5-figures. Not sure what bearing that has on the question, though...other than the basic premise that yes, losses under a certain amount likely not worth pursuing, given lawyer fees, etc. But I think I'm comfortably outside of the "would be -EV to even pursue" category, based on the research I've done. Was hoping someone here perhaps had some 1st-hand experiences to share, though.
 
Class action is useless. I was a plaintiff in a fraud case involving bogus financial statements of a company. The CEO settled the case and paid out $10 million. Guess how much I would have received? It is the grand sum of $150 but, you have to fill out a very detailed form including, your social security number. I said stuff it. You risk being victimized by identity theft for the grand sum of $150 when I lost thousands? The law firm kept most of the $10 million. They will only use you as a plaintiff to file the lawsuit then, keep the monies! Why enrich the greedy lawyers filing class action suits?
 
If you find such a company and it has options, short it by buying puts. You may be able to recoup more of your losses. Forget the empty promises of class action lawyers. They are in it to fleece their clients as much as the guilty parties! Karma will deal with them in due time!
 
Yes, I'm well aware of the shortcomings of class actions (including lawyers fees coming out of any settlement) as I detailed in my OP. That's why the Q's I asked pertained to pursuing something privately since, as I've also written a couple times, class actions typically do not cover options-related losses.
 
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