The successful operation of an institutional investor in the US securities market requires efficient investor protection and fiducial responsibility. Despite all the efforts to ensure success in the market, institutional investors’ holdings may sometimes be subject to class action lawsuits requiring institutions to recover the financial damages on behalf of their investors.
When it comes to class action lawsuits, investing institutions can file their claims with authorized claims administrators to ensure they fulfill their fiducial obligations and disperse all money owed to investors. In addition, a clear legal understanding of the recovery process will help investors streamline the asset recovery process.
Here is a step-by-step procedure of the claims filing and class action settlement recovery process.
But First: What Is a Securities Class Action?
A class action is a lawsuit filed on behalf of securities investors following an economic loss in the stock market. A securities class action is often a result of fraudulent manipulations or violation of the securities laws. Typically, an investor or group of investors can institute a lawsuit on behalf of other investors following the loss if they invested in a company.
The Recovery Process
The class action settlement recovery process is usually tedious, considering the enormous detailed documentation required for collection and submission. For this reason, most cases take about three years from the time of initial complaint until the distribution of funds to the stockholders. In other instances, settlement recovery may last up to seven years, especially if there’s an appeal.
Although some cases may go to trial, most class action lawsuits end in a negotiated settlement approved by the court. Before then, a claims administrator will validate all claims and distribute all settlements according to an agreed action plan.
Generally, the claims process involves the following crucial steps:
Data Collection and Normalization
Your claims filing begins by collecting all the relevant financial data from concerned parties. These may include your company’s asset holdings and each investor’s share capital.
Afterward, the data will be standardized to conform to the system process requirements and ensure integrity. Data normalization usually involves using artificial intelligence to detect gaps and correct errors. In addition, multiple checkpoints may be used to confirm data accuracy and account validity.
Cross Referencing of Settlement
Before settlement, all claims must be cross-referenced to check for eligibility. Thus, settlement service providers use settlement databases to evaluate all cases dating back to 20 years or more.
Data Verification
Class action service providers will review all documents detailing the financial transactions of the investing company. These will include reviewing your bank balances, financial transactions, and data integrity.
Determining the Value of Claims
A crucial step of the claims process is determining each claim’s value from the investing companies. Analysts use specialized software to process and allocate the relevant settlement for each share.
Filing Your Claim
You can then file your claim with an approved claims administrator. To ensure timely and accurate filing, the securities markets have a robust e-filing process that can accurately capture US-based and international claims.
Monitoring and Tracking
You can track and monitor the progress of your claims throughout the process. Moreover, you can reconcile multiple claims and verify your eligible settlement thanks to reliable communication channels with claims administrators.
Payment Processing
Once you collect all relevant financial data, and normalize and verify your data, your claim is ready for settlement. Claims administrators will first receive settlement checks, reconcile all settlements with the respective data, and resolve discrepancies. Afterward, they’ll disburse all settlements to the lawful beneficiaries.
