BEST PRACTICES: Developing a Policy to Participate in Securities Litigation Class Actions Flashcards
Every Public Pension Plan should develop and adopt a policy setting forth procedures for monitoring and participating in class action securities litigation.
What is the fiduciary obligation of public pension plan governing bodies and staff in relation to investments in public securities?
Recover funds lost through investments in public securities as the result of corporate mismanagement and/or fraud.
Define: Lead Plaintiff
A member of the putative class with the largest financial interest and willingness to serve, appointed by federal courts in class action securities litigation under the 1995 Private Securities Litigation Reform Act.
List the steps a plan must take to participate in the settlement process of a class action litigation.
- Monitor litigation and settlements. 2. File a notice of desire to participate by the prescribed deadline. 3. Compile relevant investment activity and documentation.
Fill-in-the-blank: A ___________ is appointed by the court to notify all potential class members of a settlement and collect documentary evidence of eligibility to participate.
Settlement Administrator
What alternatives to class action litigation are available to a public pension plan?
Individual action and group action.
Why should public pension plans develop and adopt a policy for participating in class action securities litigation?
To fulfill fiduciary duties, manage claims effectively, and maximize recovery of assets while minimizing fees.
What should be the first component of a securities litigation policy?
An agreed upon set of objectives, including effectively managing claims as plan assets and maximizing recovery.
Describe the role of a Custodian Bank in class action litigation for public pension plans.
Receives notices of class action, determines eligibility, files a “proof of claim” to participate in the settlement, and is designated where settlement funds should be deposited.
Fill-in-the-blank: Public pension plans are recommended to maintain trading records for at least __ years to assist in determining eligibility for settlement.
Ten
What act requires federal courts to appoint a lead plaintiff in class action securities litigation?
The 1995 Private Securities Litigation Reform Act (PSLRA).
What must plans do to notify the settlement administrator of their desire to participate in a court-approved settlement?
File a notice (proof of claim) by the prescribed deadline.
Who can choose to serve as the lead plaintiff in a class action litigation?
The plan’s governing body, if it decides to pursue lead plaintiff status.
What are the two alternatives to class action mentioned in the text?
Individual action and group action.
What is the primary role of the settlement administrator in class action securities litigation?
To notify all class members of the settlement, collect proof of claim forms, and disburse settlement to class members based on the size of their loss.
When considering lead plaintiff status, what might a plan need to prepare for?
Dedicate staff resources, compile information during the discovery phase, review legal documents, and possibly attend trial.
