The activity of European institutions in U.S. securities class action suits is increasing.  Most institutions are unaware of the money they are eligible to recover by filing claims, and the ones that are filing, see large recoveries in the U.S. courts.  Within recent months, we have seen more activity with European pensions becoming lead plaintiffs in large securities suits involving some high profile cases, like Petrobras.

For these European funds, it is important to understand the structure of the U.S. securities class action procedure, as well as the options they have when pursuing a suit. Compared to some European countries, where the loser pays the cost of the action, the U.S. has a plaintiff-friendly structure where the lawyers will pay the litigation fees if the case fails, and if the case succeeds, the lawyer takes on average 15-20% of the recovery.

Securities suits are generally brought to the courts in three ways: traditional shareholder class actions, derivative and takeover cases, and a share appraisal suit claim. A shareholder class action is used for securities fraud cases, for example, when a company misleads investors by providing false statements to cause a change in securities prices. A derivative action is a lawsuit brought by a shareholder on behalf of a corporation. Most derivative suits arise from mergers and acquisitions in which the merging companies fail to disclose information to their investors. A share appraisal suit claim can arise when the investors do not receive a fair price for shares in a company that has been taken over.

Read more about the class action process and the increasing activity of European institutions here.

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Founded in 2008, Financial Recovery Technologies (FRT) is the leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability, and transparency available. For more information, go to www.frtservices.com.

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