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Conference nyoss1::market_investing

Title:Market Investing
Moderator:2155::michaud
Created:Thu Jan 23 1992
Last Modified:Thu Jun 05 1997
Last Successful Update:Fri Jun 06 1997
Number of topics:1060
Total number of notes:10477

651.0. "Class Action Suits" by BROKE::SHAH (Amitabh "Amend Constitution: ban DECAF") Mon Jan 03 1994 14:42

	Last week, we got a notification about a class action suit against
	the directors (and the company) of Cytogen. We had held CYTO last 
	year and sold for a modest loss, but the stock tanked a lot after
	their drug for colorectal cancer did not meet FDA standards. The
	suit charges that the directors misled the public on the progress
	of the drug. 

	What are our liabilities in case the suit loses? Is it worth 
	participating in it?
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651.1Lawyer HeavenI18N::GLANTZTue Jan 04 1994 00:1614
    As I understand class action suits, your participation costs you
    nothing; but you automatically waive any right to initiate litigation
    yourself.
                         
    Furthermore, as a class action participant, you have little to say about 
    legal strategy, legal fees, etc.
     
    Hence, going the class action route is preferred when your own case is
    not strong or when the costs of bringing suit by yourself outweigh the
    possible gain.
    
    But if you have an especially good case; e.g., airplane accident,
    initiating action yourself is preferred. 
                                            
651.2The way it's usually done....SPECXN::KANNANTue Jan 04 1994 14:3211
   More class action suits by shareholders are settled quietly out of court
   which usually means the litigants end up with some money. Managements do
   this to avoid being "dethroned" by the board. The market doesn't like
   to bet on companies winning lawsuits. They would rather take their money
   elsewhere. It's usually not in the interest of the company to fight
   class action suits by shareholders. 

   Nari