Class action law suit against a stock holding. Should we be a signed party or not?

catch22

I've been party to two past class action law suits in past years.

The first was brought forth by others against General Motors for a known failed part in millions of engines causing eventual engine failure. GM lost the suit and had to pay all known owners of the vehicle/engine for repairs. I was notified by mail from GM, as they knew I was a current owner of the vehicle/engine in question.

The second suit was also brought forth by others. This suit involved those who either held or had held a company stock during about a two year time frame. Basically, the suit won against the company was for "accounting practices that were irregular". I received a cash award (my share of proceeds) from this class action law suit.

I am now aware of a current/pending class action law suit against a company whose stock we have owned. I discovered the notification from a news source I review. 'Course, the question for us at this house is whether we actually contact one of the several listed "law groups" jumping on this suit; or whether we will have notification via our brokerage account at Fidelity? N
NOTE: We have not contacted Fido about this for their opinion. NOTE: this law suit is apparently involved with accounting methods and the company not understanding how to comply with a particular requirement related to their business; and not any outright violation of an accounting law(s).
Thank you.
Catch

Old_Skeet

Hi Catch22,

Not sure this is the answer you seek ... "Govern as you feel best."

General, the little guy rides and does not become a lead "signed" plantiff. Myself, being a little guy, so-to-speak, have choosen to ride class action cases, in the past, over being a lead. I, more or less, leave being a leed up to the big hitters and large stake holders who have more knowledge about apparent wrong doing along with the time and wherewithal to make discovery and court appearances.

However, you might have, in the past, received more from class action suites than me. My thinking, is that the attorneys are the ones receiving the most renumeration through billable hours while little is left even for the lead(s) and other plantiffs once the adward, gets split. For what it is worth ... I have never received major money from a class action case being a minority stake holder.

Good luck with this.

Mark

Hi catch. It has been my experience to be notified of all pending class action proceedings by or through the brokerage firm (Fidelity, Scottrade etc.) where the position is held. Notification always happens after a lead plaintiff has been chosen/identified and a formal suit has been filed and certified to go forward.

I've also seen news reports of some 'pending' class action suits but I've usually viewed them as a law firms trolling expedition searching for a suitable lead plaintiff. Not all of these reports make it past the fishing expedition.

Like skeet I can't ever remember getting any renumeration from these actions that was worth the time and effort put forward in filing a claim.

sma3

I agree. even when I have invested in stocks later found guilty of egregious security frauds ( ie Worldcom) my position is so small compared to the lead plaintiffs I rarely get more than a couple of bucks. The fine print is always enticing, as your share of the award depends on how many others file,,, so what is everyone else except the lead plaintiff ignores it too?

However, Merrill Lynch sent my parents a check for a couple of hundred bucks because "we determined you were not given the best price on a recent trade". I have no idea who complained but they cashed the check!

bee

More often than not I find these class action suits (often encouraged by "ambulance chasing" lawyers) as a disproportional money grab by these lawyers.

As small investors we all should be represented by our investment fiduciaries in matters like these. Participating in these class action suits should be one of many responsibilities investment fiduciaries provide. This should always be true with ETFs, CEFs, and mutual funds. These fund managers should be our fiduciary and represent our interests. I believe even if an individual owns shares of XYZ stock and hold these shares within a brokerage account and pay fees for these accounts that fiduciary privileges should be extended to these individual investors by the brokerage house.

Sadly, legal fees make up much of what ends up being awarded and help pay for these classy three piece action suits.

Ted

@bee: You hit the nail on the head, go to the head of the class!
Regards,
Ted

Crash

I was notified of a class action suit vs. Pfizer. Pfizer themselves sent me the stuff. All you had to do to get your share of the proceeds was to document every frikkin' transaction, between the 1st New Moon of the stated year and the exact mid-point of the hurricane season of the NEXT year. Figure out exactly how much in dividends were received, buy-sell activity. Going back several years already, and all my shares were sold long before the notice came. It's a risible bunch of nonsense, DESIGNED to make you want to give up before you even begin. Those corporations keep records. But using THOSE records would make too much sense.

BenWP

Good explanation, @Crash. I nominate "risible" for word of the year, but you should get the credit for using it. I doubt I have ever received more than the price of a bowl of soup out of the suits filed on my behalf.

msf

Did you hold PFE stock directly? The vast majority of people hold stock at brokerages in street name. From the SEC:

"Street Name Registration: ...
- Since your name is not on the books of the company, the company will not mail important corporate communications directly to you."

Crash

The shares were owned through Computershare.

Crash

BenWP said:

Good explanation, @Crash. I nominate "risible" for word of the year, but you should get the credit for using it. I doubt I have ever received more than the price of a bowl of soup out of the suits filed on my behalf.

The one movie scene I know of in which "risible" (wisible?? hee hee) is used. Go ahead, laugh your sox off.

msf

Crash said:

The shares were owned through Computershare.

Computershare was the transfer agent (i.e. the company doing the stock bookkeeping for Pfizer). That means your name was on the shares. So theoretically Pfizer could have used the information its transfer agent had about your trades.

Crash

@msf: Yes, whether being required to scour my own records, or relying upon the records which the Transfer Agent was required to keep, actually getting paid as a member of the class was made to be as difficult as possible. If I were STILL a shareholder, I could rely on the Transfer Agent to send me my records. But I'd have to go over it all with a fine-toothed comb, to be able to fill-out the claim form provided by PFE. But all traces have been erased by now. And of course: PFE could have used the same records, kept by the TA. But PFE and its wonderful lawyers decided to require every shareholder to move heaven and earth, in order to benefit from the suit. And of course, they could say: "We've always done it that way" here. The same 6 words are a good indicator of a dying congregation, too.

msf

I'm agreeing with you that since Computershare was their agent, PFE already had the information it was requesting. For most shareholders, it didn't. (Still doesn't excuse their asking you for info they already had).

At least you'd get something out of all of it, though that might just be a $10 coupon good for your Pfizer brand name drug of choice. (That's a joke, I doubt something like that is legal. Though discount coupons seem to be the "reward" offered in other settlements.)

Not too long ago I was notified of a class action suit. It had something to do with mispricing(?) of a security during a specified period of time (a few years). Of course they needed to know what shares I held when in order to determine how much I had been harmed (different mispricing on different days).

However, they'd already determined that there was no error in the last three months of the period - the only time I held the security.

So I had the same opportunity as you to do all the paperwork, but after all that work I was guaranteed not to find even a coupon at the end of that rainbow.