The Facts Behind Shareholder Suits

This story is part of a special series by TheStreet.com investigating shareholders' reaction to corporate corruption on Wall Street. Click here to see a full listing of stories.

The best thing about a securities fraud class action is that the majority of shareholders don't need to do much to participate, and they can possibly recoup some of their investment losses.

Once a lawsuit against a corporation is granted class action status by a judge, all shareholders receive a letter alerting them of the litigation. In most cases, the shareholder is automatically assumed to be part of the litigation, unless he or she affirmatively "opts out." Companies sometimes list a notice of a class action suit on their Web sites or in their annual reports.

Attorneys also are ordered by the court, especially after there is a settlement or a jury verdict, to advertise the terms of the award in major newspapers, and encourage shareholders to contact them, if they haven't already been notified of the litigation. Another place to keep track of shareholders' suits is on Web sites such as Yahoo! Finance, because law firms typically issue press releases announcing the filing of a securities fraud class action. ...