Many Americans, including those in Texas, invest their money. By doing so, these individuals hope to reap returns that may help them afford retirement, pay off a house, pay for a child's education, or obtain full financial security. Though laws and regulations exist to protect these investors from securities fraud, the fact remains that fraud still exists.
In fact, a new study conducted by Cornerstone Research and the Stanford Law School,securities fraud cases are on the rise. The year 2013 saw a nine percent increase in federal class action securities lawsuits, up to 166 from 2012's 152. However, investors should be aware of a pending Supreme Court case which may change how easy it is to pursue a class action against companies that have committed fraud.
The holding in 1988's Basic Inc. v. Levinson said those who claimed to have been defrauded by false statements in securities filings could rely on a certain presumption, known as "fraud on the market," whereby it was assumed stock prices reflected the company's false statement. Thus, as the law currently stands, stockholders do not have to show they relied on actual securities filings. However, a case to be heard by the Court in March could overrule that holding, making it more difficult for wronged shareholders to reach class action status. If that happens, then it would have to be shown that each member of the class was wronged when it relied on the company's actual misrepresentations.
Those who have lost money investing know the damage it can cause. Yet, when investments are lost due to a company's wrongdoing, the feeling of being cheated may be exacerbated. Fortunately, those who believe they have been taken advantage of by a company can take legal action. When many people have been harmed, they can often band together to file a class action lawsuit, which will hopefully bring a large recovery and punish the company for its wrongdoing.
These types of cases are often complex, and, if the Supreme Court overrules Basic Inc. v. Levinson, may become even more difficult. A team of attorneys with experience handling these types of cases, though, will be able to navigate the legal waters to give victims the legal voice they deserve.