Class actions is a form of lawsuit in which a large group of people collectively bring a claim against a common defendant for a common cause of action. Typically one or a few people initially file the action asking the court to designate a group of individuals who had common dealings with the common defendant during a specific period of time as members of the “class”. No doubt many of you have received notices of pendency of proposed settlement of a class action advising you of rights you may have to a proposed settlement that has been arrived at between those class members and the defendant(s).
It is not uncommon for it to take three years or more for such a case to be resolved. The typical class action settlement is generally a small percentage of the overall claim amount. According to the details contained in the notice of pendency of proposed settlement, class members are required to take certain actions within the time frame set forth in the notice in order to participate in the distribution of any benefits. Failure to abide by the conditions contained in the notice can be costly as class members may waive any right to benefits.
A study by Cornerstone Research reveals that for the years 1996-2009, the median settlement amount as a percentage of class actions claims was 3.4%; for claims over $500 million, the median percentage dropped to 1.9%. Because claims in class action suits tend to be large, the defending firm has an incentive to devote a large amount of resources to fighting these cases and they can sometimes drag on for many years.
Depending on the terms of each class action settlement, you may have the option of opting out and pursuing an individual action. It is important to “opt out” out the class action suit in a timely manner or you will have waived that right. Notices of pendency of proposed settlement of a class action are often sent out with a fairly short deadline to reply so it is important to read and comply with the terms if that is the route you choose.
Depending upon the facts and circumstances it may sometimes be possible to participate in the proceeds of a class action and pursue a FINRA arbitration for losses as well. This is fact dependent and case specific so it is important to consult with someone knowledgeable to assist you.
Most investor cases are brought as individual FINRA arbitrations.
An individual FINRA arbitration is generally concluded in about 12 months or less. Damages recovered are generally a much greater percentage of the loss than the typical class action recovery. See our FAQs page for more information on individual arbitrations.
Robert H. Rex, Esq., head of the Securities Litigation Practice at Dickenson, Murphy Rex and Sloan PA, is dedicated to pursuing claims on behalf of investors and has practiced exclusively in the field of securities arbitration and the recovery of investment losses for more than twenty years.
If you would like to explore the possibility of filing an individual claim through FINRA , contact our firm for a free consultation.
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