5 ms·

Do you still have to be a share holder when you sue? Or can it play out like, I own xx shares in Y Corp. Y Corp does something bad and share price goes down, I

Do you still have to be a share holder when you sue? Or can it play out like, I own xx shares in Y Corp. Y Corp does something bad and share price goes down, I sell my stake and sue Y Corp for securities fraud for making my shares go down during the time period I owned them?

nickff 6y ago
IANAL, but I think you've right that you don't need to hold on to the shares, and you've pointed out the only groups of investors who would benefit from the judgement. The most benefited would be those who were harmed but sold their shares before the lawsuit was announced; shareholders who sold their shares before the matter was decided are likely to benefit to a lesser degree. In reality, class-action lawyers go looking for class members to file suit on behalf of, and make special arrangements for them to receive additional compensation above and beyond what 'regular' class members get.
Ajedi32 6y ago
That still seems strange to me; everyone's shares went down in value, not just yours. Should you be compensated for your loss by the remaining shareholders just because you decided to sell your shares and they didn't? If everyone sold their shares, wouldn't the price have gone down even _more_?
dsizzle 6y ago
Could it be even worse -- that they are shorting the stock by the time the lawsuit goes to court? The notices of class action lawsuits for stocks I've owned have only stipulated that you've owned the stock during some time window, as far as I recall.
Spinnaker_ 6y ago
Yes, that's how it works, except you would rarely sue yourself. I work for a hedge fund. Every year we send a list of all our transactions to a company. They recover money on our behalf from any legal action that may happen. These things take a long time though. We are still getting payouts from stuff that happened in 2014.
- gruez 6y ago
  >I work for a hedge fund. Every year we send a list of all our transactions to a company. They recover money on our behalf from any legal action that may happen. Is there an equivelent for a passive investor that just holds ETFs? Or does the fund already do it for me?

nickff 6y ago

IANAL, but I think you've right that you don't need to hold on to the shares, and you've pointed out the only groups of investors who would benefit from the judgement. The most benefited would be those who were harmed but sold their shares before the lawsuit was announced; shareholders who sold their shares before the matter was decided are likely to benefit to a lesser degree. In reality, class-action lawyers go looking for class members to file suit on behalf of, and make special arrangements for them to receive additional compensation above and beyond what 'regular' class members get.

Ajedi32 6y ago

That still seems strange to me; everyone's shares went down in value, not just yours. Should you be compensated for your loss by the remaining shareholders just because you decided to sell your shares and they didn't? If everyone sold their shares, wouldn't the price have gone down even _more_?

dsizzle 6y ago

Could it be even worse -- that they are shorting the stock by the time the lawsuit goes to court? The notices of class action lawsuits for stocks I've owned have only stipulated that you've owned the stock during some time window, as far as I recall.

Spinnaker_ 6y ago

Yes, that's how it works, except you would rarely sue yourself. I work for a hedge fund. Every year we send a list of all our transactions to a company. They recover money on our behalf from any legal action that may happen. These things take a long time though. We are still getting payouts from stuff that happened in 2014.

gruez 6y ago
>I work for a hedge fund. Every year we send a list of all our transactions to a company. They recover money on our behalf from any legal action that may happen. Is there an equivelent for a passive investor that just holds ETFs? Or does the fund already do it for me?