Portfolio Monitoring Service


Fiduciary Involvement

Factors a Fiduciary Should Consider in Determining Whether it Should Get Involved in Actions Arising Under the Federal Securities Laws

  1. Size of potential loss to your plan or fund.
  2. Has any other large investor stepped up to the plate to lead an action, and if so, is that investor more, or at least, as qualified as your plan/fund to lead the action?
  3. Can you retain competent counsel in the necessary time frame on more favorable terms than other investors seeking lead plaintiff status?
  4. Are your claims co-extensive with those of other class members so that they are being adequately represented (e.g., you purchased in a somewhat different class period than the present case or you have a somewhat different security than that of representatives in the present action)?
  5. How good is your claim from a legal standpoint?
  6. How easy will it be to recover assets from the potential defendants (e.g., are the assets of the defendants in the U.S. or abroad, are the defendants solvent)?

Degrees of Involvement

Degrees of Involvement in a Class Action

  1. Lead Plaintiff in a class action
  2. Opt out of class and pursue independent action early on or after a settlement with or without other investors
  3. Provide support to the litigation short of direct involvement
  4. Amicus Curiae
  5. Affidavits in support of Plaintiff Class
  6. Outside observer in order to monitor litigation progress through resolution
  7. Ensure your fund/plan recovers settlement or other case proceeds
  8. May seek to take over litigation if lead plaintiff is not adequate or is found to be atypical
  9. May want to later object to, or decide to opt out of, a settlement if you believe it is not in the best interests of your constituents and the plaintiff Class

Protect Against Lawsuit

Steps to Take to Protect Yourself Against a Lawsuit

  1. Adequately inform yourself concerning the competence of your advisors
  2. Adequately inform yourself about the nature, balance and risks associated with the investments made by your funds/plans
  3. Make sure you have in place adequate controls to monitor these investments, both from a financial and legal standpoint
  4. Make sure you are monitoring your monitors
  5. Make sure you have investigated potential fraud, derivative or corporate governance-related claims which your plan may have, retained competent counsel, and made informed decisions with respect to whether to pursue these claims
  6. Make sure you have documented everything you have done, so you have proof that you acted in good faith and had a reasonable basis for whatever decisions you ultimately reached