Securities Class Actions
Greed and regulatory failure have cost investors trillions of dollars. Wall Street scandals confirm it’s easy for corporations and their executives to manipulate the market price of their securities by misleading investors.
Public SEC filings contain false information. Balance sheets can’t be trusted. Corporate executives working hard to conceal the bad news and true financial condition of their companies.
How do they do it? Financial schemes hatched by executives and wall street advisors. Accounting gimmicks. Moving junk assets like subprime mortgages to “level three” on the company’s internal books, falsely claiming the assets are illiquid and thus can’t be valued. Even outright fraud, such as lying about the value of assets and liabilities on their balance sheet, or misrepresenting the financial strength of the business on income and cash flow statements.
Fraudulent companies may hide debt using “off balance sheet” accounting gimmicks such as “securitizations.” In some securitization schemes, the company will enter into a phony transaction having no business purpose, except to transfer debt to a bogus shell company or to “special purpose entities.”
Or unscrupulous executives will shift overvalued, distressed assets to so-called “independent purchasers,” even though they know the company is still on-the-hook for the distressed asset. Companies also are relying on purposefully complex derivatives, credit default swaps, and other financial schemes to hide their weakened financial state, conceal their debt, and to artificially inflate the price of the company’s securities above their true value.
While investors are losing billions of dollars, corporate insiders are lining their pockets. Time and again insiders cash out while the company stock is artificially inflated, resulting in millions of dollars in ill-gotten gains. After the company’s true performance is disclosed, or the fraudulent deals collapse, the company’s securities plummet in price, hammering the investing public and shareholders just like you.
Federal and state securities laws, as well as SEC and other regulations, try to protect investors from these kinds of fraudulent practices. A securities class action is a form of litigation in which investors group together and seek to recover losses from corporate fraud.
Instead of each shareholder bringing an individual lawsuit, one or more shareholders bring a class action lawsuit on behalf of all shareholders. The investors proceed in a unified action, sharing litigation costs and sharing in any recovery.
Typically the company, the board of directors, and top executives will be defendants in a securities class action, usually because these individuals are required by law to ensure the company’s public filings and statements are true and not materially misleading.
Securities class actions provide individuals investors with the only effective remedy against securities fraud and against powerful corporate interests. Doyle Lowther helps investors recover from financial and security losses by filing securities class actions against those who engage in insider trading, market manipulation, accounting fraud, or otherwise make materially false and misleading statements about their business.
If you have suffered investment losses due to fraud, please contact us.
