FAQ
1) What is PPM?
Pro-Active Portfolio Monitoring SM encompasses a comprehensive monitoring system, including the monitoring and analysis of investment portfolios, the matching of investment positions with available investor protection lawsuits, and the analysis of legal opportunities for loss recovery claims.
2) What is a class action?
U.S. law, other than most comparable laws around the world, permits collective lawsuits by bundling many, similarly situated plaintiffs in a single proceeding, without requiring an active participation or joinder in the lawsuit. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, class action suits are designed to give several small plaintiffs the opportunity to affiliate in order to assert similar claims jointly. Prerequisites are that there are questions of law or fact common to the class, the class is so numerous that a joint effort of all members is impracticable, and that the representative party will fairly and adequately protect the interests of the class.
3) What is an Opt Out procedure?
Because class actions can bind even passive, silent claimants/plaintiffs within a defined group, the legislature has given the individual participant an opportunity to exclude itself from the class action and prosecute an individual action outside of the class. The procedural instrument involved is the Opt Out of the class and the bringing of a private lawsuit against the same or similar defendants as involved in the class action.
4) What are the advantages of an Opt Out?
Loss recovery quotas vary in all cases, yet tend to be around the 5-10% in class action suits. Opt Out actions have recovered losses in the 25-40% range and, thus, represent a statistical multiple of the loss recovery in class actions.
5) What happens in a settlement?
95% of all U.S. securities litigation matters end up in settlements, subject to court approval. The moneys paid in a settlement are then deposited into a settlement fund and the net proceeds, after deduction of court approved fees and costs, are paid out to the claimants, who submit so-called Proofs of Claim within a certain period.
6) How are lawyers paid in class action litigation?
Lawyers are typically only paid in case of success and upon court approval. Such contingency fees are legal in the United States and common as payment methods for plaintiff lawyers.
7) Who pays for court fees?
Court fees are very low in the U.S., but expert witness fees and other costs associated with U.S. proceedings can be very high. All fees and costs are advanced by the plaintiffs lawyers at their own risks and only reimbursed in case of success.
8) What are the fiduciary obligations of investment managers or institutional investors?
Investment laws around the world require that investment managers and institutional investors act in the best or exclusive interest of the (represented) investors. This involves not only a professional investment strategy, but also an obligation to monitor investments for potential loss recovery opportunities. Less than 35% of institutional investors assert claims to settlement funds or reject class action suits, opt outs or other alternatives to limit investment losses. Hence, improvements in fiduciary activism is possible and most likely required.
9) What could a fiduciary do?
A responsible and customer-oriented fiduciary should implement an internal system which monitors all securities litigation cases for active participation possibilities. An analysis should be performed in cooperation with a specialty advisor/law firm and action should be taken accordingly.
10) What is the benefit for institutional investors?
A monitoring system and the pro-active consideration and analysis of cases discharges the duty towards an investor. Additionally, alternative methods of class action participation also bring additional monies into the pockets of investors and asset managers. Accordingly, performance can be increased and higher fees can be generated.
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