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Page 21 of 35 |
Suppose a company defrauds me? |
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The Federal Securities Laws, and state laws, give you very significant rights. Very often if you were defrauded, others who purchased shares at or about the same time were also defrauded. Thus, Securities Law cases are often handled as part of a "Class Action" lawsuit.
A "class action" is a civil suit brought by one or more people on behalf of themselves and others who are similarly situated. In other words, everyone is in a substantially similar circumstance where the common issues are the ones most critical to the lawsuit. For example, suppose a company issues an allegedly false press release and the stock goes from $10 to $15 but when the truth comes out the stock falls to $6 per share. A class action could be brought on behalf of all the stockholders who purchased shares after the company issued deceptive news and before the truth came out. Each member of the class allegedly suffered some harm as a result of the alleged wrong. While the damages of each member of the class will vary - someone who bought 1,000 shares at $15 each would be 10 times more impacted than a person who bought 100 shares at $15 – but the critical issue is whether the press release was deceptive, and that is common to all class members. |
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