After submitting a claim on behalf of a client, FRT received a rejection letter from the claims administrator stating the submission had no recognized loss. When comparing the claim admin’s rejections to FRT’s internal recognized loss calculations, we found a discrepancy. This promoted our Case Specialist Team to take a deep dive into the data and plan of allocation for this client’s specific claim. FRT’s analysis confirmed our original recognized loss calculation of $22,470.89 where we went back to the claims administrator to challenge its assertion. Following the administrator’s analysis of our findings and the claim, they conceded the error with our findings and validated the claims.
What is Recognized Loss?
Recognized Loss is a claimant’s eligible amount determined using a formula specified in the Plan of Allocation created in connection with a securities class action settlement. The Plan specifies an amount of artificial inflation per share during the Class Period which, when multiplied by the number of shares purchased during that time, yields a dollar amount used to determine that claimant’s share of the settlement monies. Plaintiff’s counsel determines the amount of inflation with assistance from outside damages experts.
Why does FRT calculate losses?
Calculating losses is vital because it is the metric that ultimately determines your payment amount and also allows FRT to reconcile the checks received from settlement distributions. FRT uses the calculated loss to form the basis for a claim’s value. FRT does not use this number to determine whether or not to file the claim. However, it is still an important step in the complete audit trail process of a claim because, later in the course of each claim’s lifecycle, it allows FRT to compare actual to expected recoveries, thereby ensuring proper recovery payment.
In shareholder litigation and class action recovery, the claims administrator is the ultimate authority in how recoveries will be calculated. While they are the experts, FRT has been interpreting and coding plans of allocation since inception. As a result, FRT has been at the forefront of payment validation. If a discrepancy is detected, FRT will first verify its own calculations, and if the difference still cannot be reconciled, FRT will follow up with the administrator to ensure that the client receives all of the settlement funds to which they are entitled.
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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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