As an investor in a company, you have a good reason to be interested in how that company conducts its business. When the leaders of a company behave incompetently or commit some form of misconduct that damages the value of the company (and your investment), a lawsuit may be an appropriate course of action.
Typically, an investor lawsuit will be filed as a Securities Class Action. One lawsuit will represent all of the investors who have suffered the same economic fallout that you have suffered. Some of the most well-known investor actions in recent history include:
- A lawsuit against the Chipotle restaurant chain after an outbreak of food-borne illness that was caused, in part, by a change in business practices that hadn’t been properly disclosed to investors
- A lawsuit against Facebook (which is still pending) over a secret data-mining operation that was exposed in 2018
- A lawsuit against car manufacturer Volkswagen over an emissions fraud incident that caused stock prices to plummet
- A lawsuit against Enron due to acts of deliberate fraud by top executives who misstated the company’s financial health in official reports
- A lawsuit against Tyco after massive corporate fraud was exposed and an executive imprisoned, causing the company’s stock to falter
Not all of these were successful. The action against Chipotle failed because the judge determined that no specific incident of false statements or deceit had occurred — but the others resulted in significant victories for investors. Ultimately, the lawsuits may have been the only thing investors could have done to recover their rather significant losses
A Securities Class Action suit can be complicated to even begin. If you’re convinced that a company in which you have invested didn’t play by the rules, and it cost you financially, talk to an attorney about your legal options and rights.
