Securities Class Actions – Protection for the investor

Securities are stocks issued by a company and traded on a Stock Exchange. It is possible to manipulate the value of securities by fraudulent means. Their value is also reliant on the performance of the company itself or the markets in general. The massive expansion of the internet over the last decade has also meant that false rumours in chat rooms, false newsletters and spam emails can all be used to temporarily affect the stock value. This allows the fraudster to cash in before the stock falls back to its real price. This is known as ‘pump and dump’. So what protection does the investor have against fraudulent activity or mismanagement that results in financial loss?

Securities Class Actions are a legal tool to enable investors to recoup losses. In 1995 additional legislation was introduced to reduce the number of ‘frivolous’ cases brought against companies and any cases now require a much greater burden of proof to be successful. This has made the launch of a class action much more difficult for many institutions and the individual investor. This in turn has led to the introduction of services to launch these actions on and investor’s behalf. Companies such as Goal Global Recoveries Limited (http://www.goalgroup.com/ ) provide expertise in this financial sector and will advise if a class action can be launched. If this is possible they also have the legal expertise to launch it on the investor’s behalf and help recoup the losses incurred.