Investment Advisors Face Class Action Lawsuits Over Unfiled Class-Action Claims

Strategic Insights -

In recent months, a series of class action lawsuits has been filed against investment advisors and directors, alleging that the funds they managed held shares in companies that settled securities class action cases in the past four years but did not file a proof of claim, thereby missing out on settlement payments. The Securities and Exchange Commission (SEC) has taken notice of these suits and is examining the processes used by investment advisors to determine if clients are eligible to benefit from class-action lawsuits.

Key Takeaways:

  • 12 cases have been filed against investment advisors and directors, with all or some of the defendants having their charges dismissed.
  • The lawsuits are being brought by Randall Pulliam of Barron & Budd in Dallas, with other lawyers filing on his behalf in states where he does not have court admission.
  • The complaints allege that the funds did not file a proof of claim in securities class action cases, but it is suspected that proofs of claim were indeed filed in most cases.
  • Defendants have a variety of legal defenses available, including the motion to dismiss, which may resolve the cases before director involvement is considered.
  • Notable firms involved include Akin Gump Strauss Hauer & Feld, which is representing one of the investment advisors in the suits.

Statistics:

  • 12 class action lawsuits have been filed against investment advisors and directors.
  • 12 cases have charges against all or some of the defendants dismissed.
  • Claims filed by Randall Pulliam of Barron & Budd account for all the lawsuits, with other lawyers filing on his behalf in specific states.

Sources:

  • "SEC Examining Processes Used by Investment Advisors" (exact title not provided)
  • Randall Pulliam of Barron & Budd
  • Akin Gump Strauss Hauer & Feld
  • Kim Koopersmith, partner at Akin Gump Strauss Hauer & Feld