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Tips for
Institutions Regarding Securities Class Actions
Things To Keep In Mind
As A Passive Class Member
If a securities class action complaint is filed against Company
XYZ, under the Federal Rules of Civil Procedure, you are automatically
a member of the class action if you bought the securities of
Company XYZ during a relevant time period.
Various investors can be expected to make lead plaintiff motions
and the court will select a lead plaintiff from among these motions.
Should you decide not to seek a lead plaintiff role, your status
will be that of a passive class member. You will have little
or no say as to how the case is prosecuted, nor how it will be
resolved in terms of the amount of the recovery or how it will
be allocated among class members. You will also have no input
or authority with respect to the court's selection of the lead
counsel...but you will be entitled to the same pro-rata recovery
as other class members and the Lead Plaintiff. In addition, you
retain your rights as a class member to object to any proposed
resolution of the case.
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