After submitting a claim on behalf of a client for a case against SunPower Corp., FRT received a rejection letter from the claims administrator stating the submission had no recognized loss. After being prompted by our claim filing system as to a discrepancy between our loss calculation and the administrator’s rejection, one of FRT’s Operations Associates verified the client’s claim should hold value. The Operations Associate brought this to the attention of our Senior Operations Manager who began researching the case, the plan of allocation and our client’s specific claim. FRT’s analysis confirmed our original recognized loss calculation of $276,067.50, which prompted our Operations Associate to reach out to the administrator to challenge its assertion. After the administrator analyzed the claim, they conceded the error and the claim is now in good standing.
When it comes to securities class actions involving a merger case, it’s not always “what you see is what you get.” Merger cases are often affected by different rules than more traditional class action litigation, specifically how the plans of allocation are dictated in merger/acquisition cases. In addition to that, the way a firm’s data is perceived impacts their potential recovery from a filed claim. Custodians and prime brokers often identify and handle merger transactions differently. In many instances, tendered shares can be missing closing prices, and there are many inconsistencies in how merger transactions are recorded and maintained by custodial systems. It’s important to a firm’s recovery that positions are reconciled in order to match holdings records with the number of shares tendered on the date a merger takes place.
Without knowing the ins and outs of every case, it’s likely a firm could be missing opportunities for a recovery. Even investors that made money in the security (even multi-million dollar market gains) can still be eligible for a significant recovery in a merger case. This scenario is different than the majority of other securities litigation involving fraud or misrepresentation, for example. The reason for the difference is that a merger case recovery is driven by a firm’s eligible pro-rata shares, not by recognized loss, as it is in more standard fraud cases.
Contact FRT today to learn more about how partnering with us can benefit your firm.
In speaking with prospective clients, we often hear them say “the only people who get any real money from class action lawsuits are the law firms”, incorrectly concluding that there is no “real money” for the average claimant. Unfortunately, they are sometimes right, and at other times they are way off.
So, how does one know which cases are the best ones to respond to? The answer largely is that you don’t know; the best you can do is make an “educated gamble”.
Here’s why: the “payout” to each eligible investor depends on a number of variables. These include:
- The size of your investment in the relevant security(s) in the relevant timeframe
- The size of the settlement pool (i.e., how much was allocated in total to affected investors)
- The number of other investors who file claims (and the size of their investments)
- The amount of “recognized loss” that you have in those security(s)
“Can you give me a ‘ballpark’ of what to expect?” is what we often hear in response. The answer: anywhere from a penny to 100 cents on the dollar. And that’s not a flip answer. As the chart below shows, the actual data does range across the entire curve, albeit with more being below 50% than above.
Source: Financial Recovery Technologies, analysis of historical data.
“So can we just focus on filing the ‘big ones’ and skip the rest?”, you might ask. The answer is an emphatic “No”. Often, the large, well-publicized cases have many people who file claims and/or the average investment is small in size relative to the total pool. Sometimes, the “big windfalls” come from the most unexpected places. In fact, some recent examples of high payout settlements that have resulted in large recoveries for our clients include:
- Kinder Morgan, Inc.
- Refco Finance Holdings, Inc.
- Brocade Communications Systems, Inc.
- Petco Animal Supplies, Inc.
- American Tower Corp.
So what’s the best approach? In the end the conclusion is simple: don’t forego found money by walking away from the table. Instead, make sure you have a seat and can sweep up your winnings every hand (without having to ante), as every once in a while the pot is huge.
How do you do this? First, make sure your overhead cost for filing claims is low. Second, submit your claim for all cases in which you are eligible to file a claim. Then sit back and wait for the checks to come in.
Contact FRT today to find out how we can handle your claims filings with our comprehensive service to help ensure your firm recovers all the settlement funds that you are entitled to receive.