FRT Insights


Part 1: Three reasons why firms are implementing a shareholder litigation policy

In times of increased uncertainty, managing risk becomes even more critical. Ensuring proper procedures and controls are in place across your business is paramount to continued success in any environment. One area that should not be forgotten when structuring your corporate governance programs is shareholder litigation.

A litigation policy can go a long way in making sure your firm is not caught by surprise about any recovery opportunities. There is a wide spectrum of sophistication as it pertains to shareholder litigation policies, with some firms not having anything in place and others documenting every step of the process.

Below are three benefits for implementing a shareholder litigation policy:

1. Prepare for the Future to Mitigate Potential Risk
In the U.S., fiduciaries must now be cognizant of the outside filing time limits for each potential claim our funds have if they wish to consider direct action in the U.S., as well as the time limits for bringing claims in countries outside the U.S. where opt-in group recovery efforts are undertaken.

In the years since Morrison, the number of jurisdictions outside of the U.S. has grown significantly and the legal systems in these countries have been changing rapidly as courts grapple with the challenges of dealing with large groups of institutional investor claimants. Fiduciaries need to understand and keep abreast of these, from the organizers (typically lawyers and funders) seeking to represent their interests locally to each country’s legal frameworks governing this area.

The shareholder litigation landscape is rapidly evolving and without a well-defined policy on how to deal with it your firm may be opening itself to fiduciary risk. With the increased volume of opt-in actions happening across the globe along with the rise of new types of class actions within the U.S. (Antitrust, ADRs, etc.) there has never been a more important time to make sure you have appropriate coverage for all situations.

2. Streamline your Process
Beyond that, a policy can even help streamline your process to evaluate opportunities you become aware of. Some of the more sophisticated litigation programs in the industry use loss thresholds to help determine their course of action and direct attention to the cases that matter most. Having a structured approach like this can ease the strain on your legal and compliance teams thus allowing them to focus on their responsibilities outside of shareholder litigation.

3. Documented Audit Trail
There is no requirement on the level of detail but given the increasing complexity of the industry, it is strongly suggested that firms have a documented approach of some kind. If anyone, internally or externally, comes asking questions like “Why didn’t we get involved in this case?” the answer can be as simple as directing them to your policy instead of having to search through old correspondence. A policy helps you spend less time making decisions as well as defending them.

Don’t know where to start? You can reach out to FRT and we are happy to develop a brand new policy or enhance anything you already have in place.

Look for part 2 of implementing a shareholder litigation policy where we uncover additional trends that impact policy development including (a) more client efforts to understand loss estimates and why they differ among organizers; (b) more two-stage strategies or multiple legal avenues to recovery in the same country that will require multiple loss thresholds per jurisdiction (e.g. Netherlands, UK); and (c) more non-standard cases that don’t fit neatly into policy categories (e.g. PG&E, closet tracking).


Learn More

To learn more about how FRT can help your firm maximize recoveries in shareholder class action settlements, contact us at

About FRT


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

This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and do not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.

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