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FAQs

Securities Fraud Cases

Generally, when an officer of a publicly traded corporation lies on the corporation’s financial statements for the purpose of increasing the value of the corporation’s stock, or to keep the value of the stock from decreasing, the officer is committing securities fraud. 
If you purchase shares of stock in a company when a corporate officer is committing a fraud you are hurt because you are paying more for the stock than it is really worth.
A corporate officers’ main job is to maximize the value of his corporation’s stock.  Additionally, most corporate officers own many shares of their corporation’s stock. Generally, an officer lies either because he is doing a bad job, and he lies to keep his job, or he lies because he wants to keep the price of the stock high long enough for him to sell his own shares at a high price. The practice of a corporate officer lying to keep the value of his corporation’s stock artificially high, and then selling his personal portfolio of stock at its inflated value is commonly called “insider trading.”
If you are the victim of a securities fraud, you can recover your money by suing the corporate officers that defrauded you. If the lawsuit is successful at trial, or if a settlement is reached, you will recover your losses.

Generally, the law calculates your losses by deducting from the amount that you paid for shares that you purchased during the class period the amount that you sold those shares. If you have not sold all the shares that you purchased during the class period within three months following the end of the class period, then the law calculates your loss on those remaining shares by deducting the weighted average market price of the stock in the three month period following the end of the class period from the price that you paid for those shares.

Every case is different and the outcome of an individual case is unpredictable.  Therefore, the Law Offices of Howard G. Smith makes no promises regarding recovery.  However, historically, if the Law Offices of Howard G. Smith takes on a case, Mr. Smith will obtain a recovery approximately 75% of the time, and shareholders who file a claim for their proportionate share of a class settlement will get back in their pockets approximately 50% of their losses.

A securities fraud class action lawsuit is a lawsuit where many investors harmed by corporate fraud join together to sue the officers that defrauded them. The defrauded investors join together to sue the officers that defrauded them because it would not be economically feasible for each defrauded investor to separately sue the officers that defrauded him.

Sometimes, shareholders who continue to hold their shares are concerned that the lawsuit will negatively financially affect the Company moving forward. However, if the shareholders win the case, in almost all instances the wayward officers have Directors and Officers (D and O) Insurance available to pay the recovery. Therefore, the securities case will have little to no affect on the Company’s ability to function moving forward.

The class period is the time period during which the lawsuit alleges that corporate officers were misleading investors and thereby artificially inflating the price of the Company’s stock. You must have purchased your stock during this period of time to be included in the case.

When an attorney drafts a lawsuit against corporate wrongdoers, the attorney first looks for bad news that results in a precipitous drop in the Company’s share price. The bad news is called a “corrective disclosure,” because the news corrects the market price of the stock to where it should have been but for the fraud. The day before the corrective disclosure is the final day of the class period because anyone purchasing stock after that day is on full notice of the wrongdoing and therefore not a victim of the fraud. The beginning of the class period is the day the attorney, after reviewing the Company’s prior public statements, determines that corporate executives first knew of the information in the corrective disclosure but hid the information from the public.

If you purchased your shares prior to the class period, please feel free to submit your information to the Law Offices of Howard G. Smith, or call and speak to Mr. Smith directly, regardless that you do not currently qualify for the lawsuit.  Even though a class period exists which does not include your purchase date, the investigation of the case is ongoing, and we may be able to amend the class period to include your purchases as we learn more information about the case.  Also, even if it is not possible to expand the class period to include you, we may be able to file a derivative lawsuit on your behalf.

An aggrieved shareholder will file a lawsuit on behalf of themselves and all other shareholders similarly harmed by the actions of the wayward corporate officers.  The lawsuit asks the court’s permission to allow the plaintiff to represent all other aggrieved shareholders.  However, there may be other aggrieved shareholders who also wish to represent all aggrieved shareholders.  In fact, there may be several different shareholders who initiate lawsuits, each seeking to represent all other aggrieved shareholders.  The court will then set a deadline to consolidate all cases into one and to pick a shareholder to represent all other shareholders in the consolidated action.  The representative that the court chooses is called the “lead plaintiff.”

The lead plaintiff is the person that the court appoints to act as the representative of all aggrieved shareholders.  The lead plaintiff will make all litigation decisions for the class including whether to settle the case and for what amount.  The lead plaintiff is the only shareholder who will know what is happening with the litigation until the case settles, at which point in time the lead plaintiff will notify all other class members regarding the settlement.  The lead plaintiff is a fiduciary for all aggrieved shareholders and must litigate the case with all shareholder’s interests in mind, notify other class members at the end of the case of the settlement, and distribute funds proportionate to each shareholder’s individual loss.

If you lost an amount of money that is significant to you, then you want to be the lead plaintiff because you would rather have control over the litigation than to allow someone else to represent your interests.  Also, often the court will compensate the lead plaintiff with a monetary award, in addition to their proportionate share of the class action recovery, for their time overseeing the case.

No. The Law Offices of Howard G. Smith will never ask you for any money and will cover any cost or expense of litigation from its own funds.

Yes.  A securities case alleges that corporate executives lied and caused you to purchase your shares for more than they were worth at the time.  Since the case alleges past wrongdoing, nothing you do in the future, be it holding, selling or purchasing additional stock in the Company, will affect your rights in the lawsuit.

You apply to be the lead plaintiff simply by filling out a form online.  You may also call the Law Offices of Howard G. Smith.  Mr. Smith will personally explain to you how to apply to be the lead plaintiff and answer any questions that you may have.

Generally, the court will choose as the lead plaintiff the shareholder with the largest financial loss in the stock who applies to be the lead plaintiff before the deadline.

Generally, not much.  If the court appoints you as the lead plaintiff, mostly you will have to review and sign off on documents that the Law Offices of Howard G. Smith prepares for the case.  Your lawyer will take care of most of the work in a securities class action case including preparing and filing legal documents with the court and, in the case of a recovery, finding, notifying and paying other class members.

No.  You are automatically a passive litigant in every lawsuit filed against the Company, and you will be a passive litigant in the consolidated case against the Company.  As a passive litigant, you are eligible to recover your losses if the case is successful.  However, you will have no say in the litigation and will receive no updates until the case settles.  If the case is successful, the lead plaintiff will find you through your broker and let you know how to collect your proportionate share of the class recovery.  Since you are automatically a member of the class regardless if you hire an attorney, when we ask you to “join the class,” we are really asking you to apply to be the lead plaintiff.

Generally, the litigation takes 2-3 years from start to recovery.