A securities class action is a lawsuit brought by and on behalf of all investors who purchased shares of the same stock or security and lost money on that investment because some kind of securities fraud was perpetrated that artificially inflated or deflated the value of the stock.

What normally happens is that an investor initiates the lawsuit on their own and then acts as the “representative” for all investors who owned shares of the stock or other affected security when the fraud was committed.

These lawsuits can typically go on for a few years, and will result in a settlement, a judgment, or a dismissal. If a settlement is reached, typically reimbursement in the form of either cash or securities will be distributed to the plaintiff stockholders in the case.

How Do I Become Involved In a Securities Class Action?

If there is a securities class action involving a security you own and you wish to be involved in the lawsuit, you should contact the attorneys of the “representative” investor (i.e., the investor who filed the class action). It does not matter if you have already sold the security, as long as you were a holder in the time period that the fraud took place and experienced a financial loss as a result of the fraud.

To look to see if there are any class action lawsuits involving securities you own, you may want to check the Securities Class Action Clearinghouse run by the Stanford University School of Law, or just type the name of the security into a search engine and see what pops up.

Should I Consult an Attorney If I Get Involved in a Securities Class Action?

While it is not necessary to have a qualified attorney if you are not the class representative, you may want to contact an securities attorney who has experience in class actions and securities laws so that you know what you are getting into. Your lawyer can explain the class action procedures to you and let you know how much money you would receive if the judgment or settlement goes in your favor.