Q: Hi there,
What do you think about the class action lawsuit just announced regarding alleged security fraud?
Thanks,
What do you think about the class action lawsuit just announced regarding alleged security fraud?
Thanks,
5i Research Answer:
These are exceptionally common, whenever a stock drops a lot. They are essentially impossible to prove, and amount to 'management should have known'. In 95% of cases they amount to nothing. In a small amount, the company may pay a nominal amount to make the claim go away. In no case have we ever seen a material penalty amount to a company awarded. It costs nothing to join, and investors need to decide if the time required to fill out forms is worth the effort. Usually, it is not. But we do know of some investors who have received cheques in the $200 to $2,000 range from certain claims that were settled (typically it is pennies on the dollar of losses).