Back in December 2021, we mailed a letter to our clients saying we had made a change in how we process securities litigation and class action lawsuits related to publicly-traded investments. Here are the top 10 things to know about this:
- First, what exactly is a securities class action. Some of the worst offenders include Enron and Worldcom. Okay with that out of the way, here we go.
- You no longer need to mail to or drop off at P&A the class action lawsuit/litigation paperwork you receive in the mail. With every one of these, and there have been hundreds over the years, we’ll get a number of clients who call in or stop by with questions about this paperwork. Going forward, you can shred any pages with your name and address info on it and throw away or recycle the rest.
- The reason for #1 is because we have hired Broadridge Investor Communications, Inc. to do this work on our clients’ behalf. We believe this service will eliminate any errors encountered on manually filling out paperwork and we also believe the professional help from Broadridge will give us a better success rate in these litigations.
- Broadridge built the only complete record date file for proxy, regulatory and corporate action events and has added the global reach, infrastructure, and technology to identify and capture all class action cases. Utilizing Broadridge reduces the risk of a missed settlement or investor notification.
- Additionally, using Broadridge protects client data, as they do not use any client information other than the purpose of processing claims.
- Charges for the processing of class action claims shall be subject to a contingency fee assessed directly by Broadridge in the event a recovery is made – in other words, a successful outcome. The contingency fee shall be 20% of the total reimbursement of the class actions settlements that Broadridge collects for our clients.
- Class action recoveries, less the contingency fee, shall be deposited by Broadridge to our custodian Charles Schwab and then credited to the appropriate accounts. P&A does not receive any portion of the contingency fee charged by Broadridge.
- P&A will notify clients when deposits are made from successful settlements. We will be able to see the specific litigation and the amount awarded to specific accounts.
- Broadridge will also look back over a 3-year time period and file any forms for any litigations during that time. Because they are experts in this field, Broadridge has a full understanding of what litigations are still open, the intricacies of each settlement and the possible outcomes.
- There is nothing you need to do from here on out related to class action lawsuits and litigation.
If all this talk of securities litigations has your head spinning, we’re happy to answer any questions you have.
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Pittenger & Anderson, Inc. does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Additionally, the information presented here is not intended to be a recommendation to buy or sell any specific security. To learn more about our firm and investment approach, check out our Form ADV.
