Many holiday traditions come from Germany and Austria including the song Silent Night (1818), the Advent Calendar, and Kris Kringle or Weihnachtsmann (Father Christmas). To these, we add a new one: document demands.

The holidays are already stressful trying to get everything done to enjoy time off during the second half of the month. This year, demands are worse with case organisers requiring documents, in short order, to join or continue pursuing German securities claims.

It’s not the case organizers’ fault. Like a polar vortex, a convergence of forces is responsible for the cold winds. The German statute of limitations – or legal time limit – to bring securities claims always ends on December 31 three years after the date on which a fraud could be reasonably discovered. Based on underlying facts, the organisers of actions against Daimler and Bayer believe that claims expire at year-end and are asking for information from you before Christmas to ensure sufficient lead time to get everything filed. Unfortunately, the timing of the German statute of limitations makes such deadlines reappear every year, like an angry Krampus, to punish you right before the holidays.

At the same time, the German court is requiring plaintiffs to provide documents before the holidays in previously filed suits against VW. The statute of limitations for these claims has already passed. This deadline is instead the culmination of months of legal wrangling between the parties, and the court’s desire to move things to closure, which just happens to coincide with these other case demands.

Either way, you may feel like you’re getting lumps of coal. While it won’t make gathering easier, it may help to understand why the documents are being sought.

Thousands of investors sued VW. The defendants convinced the court it was necessary to test the bona fides of each claim before getting too deep into the legal merits of the case. They’re challenging each investor’s authority, standing, and losses. To respond, local counsel is asking you for four types of documents:

• Custodian confirmations to substantiate the trades on which your damages are based;
• Proof that each entity asserting claims is duly formed and in good standing;
• Proof the person authorising suit, i.e., signing the power of attorney for local counsel, had the authority to do so; and
• If the entity authorising suit differs from the entity that suffered the trading loss, proof the former has the authority to pursue legal claims for the latter. Common relationships include trustee-beneficiary, parent-child, and investment manager-client.

In Scrooge-like fashion, VW hopes aggressive challenges will deter investors or give the court reason to reject their claims. German courts demand precision. If paperwork does not fully tie-out – e.g. a claimant was misnamed in filings – the courts can be unforgiving. They may treat corrections as new claims and consider them legally expired. Worse yet, the defendants can then seek cost awards for their efforts in responding. This is different from US litigation, where courts routinely permit amendments, particularly to remedy minor issues. Bah Humbug!

Responding to this experience in VW, case organisers are now front-loading document requirements for new cases, insisting that clients provide them at time of registration. Long term, this will make the proceedings more efficient; but for the moment, it feels like a New England Nor’easter with requests in multiple cases hitting all at once.

Let the FRT team be your Rudolph, helping to guide you through the paperwork blizzard. Hopefully, the hassle will make your holidays feel warmer and the New Year will usher in significant payouts. I know that’s on my Christmas list.

Learn More

To learn more about how FRT can help your firm maximize recoveries in shareholder class action settlements for passive participation (opt-in), active participation (opt-out) and non-standard cases, contact us at learnmore@frtservices.com.

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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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