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New York Investing Meetup RIGRODSKY & LONG, P.A..

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Presentation on theme: "New York Investing Meetup RIGRODSKY & LONG, P.A.."— Presentation transcript:

1 New York Investing Meetup RIGRODSKY & LONG, P.A.

2  A LAWSUIT BROUGHT ON BEHALF OF A CLASS OF INVESTORS WHO PURCHASED SHARES OF THE COMPANY DURING THE TIME OF THE WRONGDOING (THE “CLASS PERIOD”)  THE CLASS PERIOD BEGINS WHEN THE DEFENDANT MAKES A MATERIALLY FALSE OR MISLEADING STATEMENT THAT ARTIFICIALLY INFLATES THE PRICE OF THE STOCK  THE CLASS PERIOD ENDS WHEN THE TRUTH IS DISCLOSED AND THE ARTIFICIAL PRICE INFLATION IS REMOVED FROM THE STOCK. THIS CAUSES THE PRICE OF THE STOCK TO DROP SECURITIES FRAUD CLASS ACTION

3  WHY A CLASS ACTION?  THE LAWSUIT IS BROUGHT AS A CLASS ACTION BECAUSE INDIVIDUAL LAWSUITS ARE TOO EXPENSIVE TO LITIGATE BASED ON THE POTENTIAL RECOVERY FOR INDIVIDUAL INVESTORS  FINANCIAL RECOVERY GOES TO THE MEMBERS OF THE CLASS  LAWSUIT SEEKS TO RECOVER THE DIFFERENCE IN THE TRUE VALUE OF STOCK AT THE TIME OF PURCHASE (MINUS THE PRICE INFLATION CAUSED BY DEFENDANT’S MISREPRESENTATION), AND THE PRICE THE INVESTOR PAID FOR THE STOCK  ANY SETTLEMENT MUST BE APPROVED BY THE COURT WHICH DETERMINES IF IT IS IN THE INTERESTS OF THE CLASS SECURITIES FRAUD CLASS ACTION

4  THE LEAD PLAINTIFF  THE COURT PRESUMPTIVELY APPOINTS THE PLAINTIFF WITH THE LARGEST FINANCIAL LOSS FROM CLASS PERIOD PURCHASES  THE LEAD PLAINTIFF, IN CONSULTATION WITH HIS COUNSEL, DIRECTS THE LITIGATION  THE LEAD PLAINTIFF APPROVES ANY SETTLEMENT OF THE LAWSUIT SECURITIES FRAUD CLASS ACTION

5  PLAINTIFFS MUST PROVE EACH ELEMENT OF THEIR CASE:  DEFENDANT MADE A MATERIALLY FALSE AND MISLEADING STATEMENT OR FAILED TO DISCLOSE INFORMATION THAT MADE ANOTHER STATEMENT MATERIALLY FALSE AND MISLEADING  THE DEFENDANT ACTED INTENTIONALLY OR WITH SEVERE RECKLESSNESS (“SCIENTER”)  PLAINTIFF RELIED ON THE INTEGRITY OF AN EFFICIENT MARKET (NYSE OR NASDAQ) SO THAT THE STOCK PRICE REFLECTED ALL MATERIAL INFORMATION ABOUT THE COMPANY  DEFENDANT’S MISREPRESENTATIONS CAUSED THE PRICE OF THE STOCK TO BE ARTIFICIALLY INFLATED DURING THE CLASS PERIOD  PLAINTIFF WAS HARMED BY DEFENDANT’S MISREPRESENTATION BY PAYING TOO MUCH FOR THE STOCK SECURITIES FRAUD CLASS ACTION

6  EXCELLENT RECENT RESULTS:  EVERGREEN ($25 MILLION SETTLEMENT ABOVE PRIOR SEC SETTLEMENT)  MBNA ($25 MILLION CLASS RECOVERY)  CURRENTLY SERVES AS LEAD COUNSEL IN:  Piazza v. Nevsun Resources Ltd. et al., 1:12-cv PGG (S.D.N.Y.)  Primo v. Pacific Biosciences of California, Inc., et al., 4:11 –CV-6599 (N.D. Cal.)  Palny v. Focus Media Holding Limited et al., 1:11-cv (S.D.N.Y.) SECURITIES FRAUD CLASS ACTION

7  A LAWSUIT BROUGHT ON BEHALF OF A CLASS SHAREHOLDERS IN THE COMPANY AGAINST THE BOARD OF DIRECTORS FOR FAILING TO GET THE PRICE AVAILABLE IN THE BUYOUT  THE FINANCIAL RECOVERY GOES TO MEMBERS OF THE CLASS  EXCELLENT RECENT RESULTS:  CNX GAS ($42.7 MILLION RECOVERY)  METROLOGIC ($12 MILLION RECOVERY)  MEDIACOM COMMUNICATIONS ($10 MILLION RECOVERY)  MUST BE A CURRENT SHAREHOLDER WHO PURCHASED SHARES BEFORE THE ANNOUNCEMENT OF THE TRANSACTION  CANNOT SELL SHARES DURING THE PENDENCY OF THE LAWSUIT TAKEOVER CLASS ACTION CASE

8  CURRENT SHAREHOLDERS CAN USE THE BOOKS AND RECORDS INSPECTION STATUTES ON THE BOOKS IN MANY STATES TO INVESTIGATE POTENTIAL WRONGDOING AT THE COMPANY  REQUIREMENTS:  CURRENT SHAREHOLDER  PROOF OF OWNERSHIP  VERIFICATION  POWER OF ATTORNEY TO INSPECT RECORDS  INSPECTION DEMAND MUST BE FOR A “PROPER PURPOSE”- INVESTIGATING CLAIMS OF MISMANAGEMENT AND WRONGDOING IS A PROPER PURPOSE  IF THE COMPANY REFUSES TO PRODUCE DOCUMENTS OR DOES NOT PRODUCE SUFFICIENT DOCUMENTS, A SHAREHOLDER CAN BRING A STREAMLINED LAWSUIT TO COMPEL PRODUCTION BOOKS AND RECORDS DEMANDS

9  A LAWSUIT BROUGHT ON BEHALF OF THE COMPANY AGAINST THE BOARD OF DIRECTORS FOR VIOLATIONS OF FIDUCIARY DUTIES TO THE SHAREHOLDERS  ANY RECOVERY GOES TO THE CORPORATE TREASURY  EXCELLENT TOOL TO REFORM CORPORATE GOVERNANCE WITHOUT NEED FOR A PROXY BATTLE  RECENT RESULTS:  CHIQUITA  MASSEY  LLOYDS  REQUIREMENTS:  MUST BE A CURRENT SHAREHOLDER AND CONTINUOUSLY HELD SHARES DURING THE TIME OF THE WRONGDOING  MUST HAVE SUFFICIENT FACTS TO SHOW “DEMAND FUTILITY”  CANNOT SELL SHARES WHILE THE LAWSUIT IS PENDING SHAREHOLDER DERIVATIVE LAWSUIT


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