Securities Litigation Requires Skilled Attorneys
When you invest in a corporation, and you do so through the purchase of securities, it is usually not an off-the-cuff decision. You are going to be supplied with documentation showing that your investment is sound and smart, and you may receive official financial statements demonstrating the health of the company and the potential for growth. And then you might be astonished to learn that your investment was a flop and that you won’t be able to recoup any of the monies supplied to the company when it went public and sold you your securities.
What can you do? The first step is to find out if there is any securities litigation already setup. Though you, as a public customer may not be able to file an action against a company you feel committed securities fraud, you can find out if some sort of arbitration is planned or under way.
Does that confuse you? Well, you should know that a lot of brokerage account agreements include what is known as an arbitration clause that will allow any disputes to be resolved entirely through arbitration (a fancy term for negotiation outside of court). If you have gone through your documents and not found anything indicating that you cannot bring a court action against a firm because of fraud, then you want to get in touch with a law firm that has experience in securities litigation.
Know Your Rights
You will have to have a valid reason to bring securities litigation against the company that issued you the securities in the first place. Most of the time investors point out that the firm offering securities to the public failed to give information that a reasonable person would require in order to make a well-informed decision about the investment. In other words, if you know that the firm withheld adverse information that would have given you cause to question the investment or that they went so far as to fail to disclose facts at the time of the IPO – you probably have a case of fraud.
Naturally, this is not something you will jump into on your own, and you must start the entire process of securities litigation by locating a firm with a history in this area. They are going to have a lot to prove before they can bring your claim forward. There are specific laws (including some dating back to the 1930s) that give investors methods of seeking compensation when they are defrauded, but they are complex and require a lot of evidence.
After all, how is it that you will prove that the materials given at the time of the IPO (initial public offering) were fraudulent? How will you prove that adverse information was withheld? This takes an in-depth and expert assessment of the company’s financial information, and that is but one facet of securities litigation. Although any company that has issued securities must consistently provide all of the facts about its business and file quarterly reports to the SEC (Securities and Exchange Commission), some companies do and have committed fraud.
It is entirely against the law to fail to disclose such facts, but you may take reports at face value and not recognize when information is being withheld or concealed. This is why your securities litigation process has to begin with a knowledgeable firm of lawyers experienced in this particular area. Though it can be a lengthy and frustrating process, and though you are not guaranteed any financial returns, it is a wise idea to pursue securities issuers if you feel they are committing fraud and acting against the established laws.
WiseGeek.com. What Is Securities Litigation. 2015. http://www.wisegeek.com/what-is-securities-litigation.htm