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Should I join a class-action securities lawsuit?

| Apr 7, 2020 | Securities Law And Litigation |

While many of the individuals who own shares in a company ultimately have a very small ownership stake in it, all shareholders generally feel the financial impact when the company that they invested in is discovered to have violated securities laws. It’s in instances like these that a group of shareholders may join together as part of a class-action lawsuit to seek damages against a defendant.

A class-action lawsuit is quite simply a joining together of multiple plaintiffs. They come together to sue a common defendant for their alleged wrongdoing.

Individual shareholders may join together with others in taking legal action against a defendant for many reasons. Perhaps one of the most common reasons it happens is because a plaintiff’s loss may be too little to warrant them taking costly legal action in their individual capacity. Plaintiffs can share the financial burden of hiring attorneys and covering legal costs by joining together.

Plaintiffs often file class-action securities lawsuits after they’ve been misled. If they can prove that a publicly-traded company purposely put out deceptive financial forecasts in an underhanded effort to coax potential shareholders into investing in their company, then the defendant may warrant being sued as part of a class-action securities lawsuit.

The same logic applies if the defendant violated the U.S. Securities and Exchange Commission Rule 10b-5. This federal regulation has to do with the prohibition of deceit and fraud. If a company purposely omits information about their liabilities or lies about what they’ve earned, then the appropriate ground may have been laid for a company to be sued.

Attorneys generally start making public advertisements announcing that they’re seeking to speak with potential plaintiffs on either the radio, television or internet once they’ve brought together enough individuals who have been wronged. They continue building that class up until shortly before the case is ready to move to trial. Any settlements that are won are generally divided up among the plaintiffs proportionate to their losses should the class be victorious in trying their case at trial.

There are many pros and cons to joining a class-action securities lawsuit. An attorney can review the details of your Louisville case and let you know if it’s best for you to file a class-action lawsuit or if filing your own case here in Kentucky is warranted.