What Stockholders Need to Know

Before you can determine whether to participate in a securities fraud class action settlement, you must determine if you qualify to submit a claim.

Securities fraud occurs when a public company (or its executives) make false or misleading statements, or withhold material information, which artificially inflates the company’s stock price. When the truth emerges and the stock price drops, investors lose money. Investors who purchased or sold the company's stock during the time in which the company or its fiduciaries committed the wrongdoing (the "class period") can pursue a securities fraud class action against the wrongdoers. The class action will be brought on behalf of all similarly situated investors who purchased during the class period (the "class members"). 

If a settlement is reached in a securities fraud class action, the parties are required to obtain the court's approval to proceed with the settlement. First, the court will hold a hearing to preliminarily approve the settlement. If the court finds that the settlement is fair, reasonable, and adequate for the class members, it will direct the parties to provide notice of the settlement to shareholders. That notice will let shareholders know the terms of the settlement and the date by which they must submit their settlement claim form. Shareholders who disagree with the terms of the settlement, can object to the settlement or opt out of the settlement so as not to be bound by the settlement terms. After shareholders have received adequate notice, the court will hear the motion for final approval of the settlement.  

To participate in the settlement, shareholders must complete the claim form and submit all necessary supporting documents to the claims administrator – the company that will collect and analyze all the settlement claim forms. If the claims administrator has questions regarding the claim, or identifies that any information is missing, the administrator will reach out to the shareholder. If you do not hear from the administrator, you simply wait until the claims have been resolved.  Payment on settlements usually begin nine to twelve months after the settlement is finally approved, as there is significant analysis that must be computed to evaluate each shareholders’ claim and determine their share of the proceeds. Once the claims are resolved, the administrator issues payments, via check, direct deposit, gift card, or Venmo.

Class members are not required to participate in the settlement but have the option to participate in the settlement. If a shareholder does not have the necessary documentation, or for some other reason does not want to participate, they can choose not to. The most frequently heard argument against submitting a claim form is that the settlement is so low it's not worth the time to submit a claim. While some settlements will not generate a large recovery – especially if a shareholder only purchased a small number of shares during the class period – shareholders really should take advantage of the opportunity to get compensated for their losses. Because securities class action settlements are issued on a pro rata basis, the amount each shareholder receives will be based on the number of settlement claims submitted. The fewer the claims submitted, the greater the amount each shareholder will receive. If you have the time and the documentation, you should submit a claim form to recoup any proceeds available to compensate you for your loss.

What were the largest securities class action settlements of 2024?

Each year brings a few standout settlements. In 2024, 136-court approved monetary securities class action lawsuits settled for over $4.7 billion. The largest of these settlements included: Apple ($490 million), Under Armour ($434 million), Alphabet ($350 million), and Uber ($200 million). These four settlements totaled over 30% of the total value of the 2024 securities suit settlements.

Action Steps for Shareholders:

• Read the settlement notice carefully
• Check if you are a part of the class
• Decide whether to file a claim, object, or opt out
• Consult with Robbins LLP if you need help determining any of the above or with submitting your claim.
• Submit your claim form before the deadline – be sure to include all supporting documentation with your claim. 
• Sign up for Robbins LLP's Stock Watch service to stay informed of upcoming securities class action settlements