Securities Fraud & Shareholder Litigation

Directors and officers of corporations are obligated by law to exercise good faith, loyalty, due care and complete candor in managing the business of the corporation. Their duty of loyalty to the corporation and its shareholders requires that they act in the best interests of the corporation at all times. Directors who breach any of these "fiduciary" duties are accountable to the stockholders and to the corporation itself for the harm caused by the breach. A substantial part of the practice of Chimicles & Tikellis LLP involves representing shareholders in bringing suits for breach of fiduciary duty by corporate directors.

In addition, a substantial part if the practice of Chimicles & Tikellis LLP involves representing shareholders in bringing suits for violations of federal securites laws.

In a securities class action, an institutional or individual investor, or group of investors, bring an action on behalf of a large number of investors (a "class"), all of whom have suffered a substantially similar type of loss (often evidenced by a drop in stock price) stemming from violations of the federal securities laws. The class is usually made up of people who purchased the same investment or group of investments during the same time frame (the "class period"). A securities class action seeks damages on behalf of investors who acquired a company's stock during a period of time when alleged fraud caused the price of the stock to be artificially inflated, and because of that fraud, the investors overpaid for the stock, or would not have purchased the stock if they had known the truth. Often, the type of information disseminated during the class period that artificially inflates the stock's price will include false or misleading statements about matters such as a company's financial condition, business operations or prospects for earnings or growth.

An investor who is a victim of fraud, or is misled, in connection with his purchase or sale of a stock, and who has suffered damages as a result, may file a suit against persons and entities responsible for the damages under the federal securities laws. Class actions exist to enable the claims of thousands of similarly situated individuals to be prosecuted efficiently in one proceeding. Claims of individual class members are too small to make it feasible for them to pursue their claims on an individual basis, particularly against a large corporate entity which can well afford the expense of vigorously defending a lawsuit for violations of the federal securities laws. Even if an investor suffered damages in the tens of thousands of dollars, it would cost far more than that to pay the legal fees and expenses that would be required to obtain relief. However, by bringing a class action, and by being represented by lawyers who work on a contingent fee basis, many people having relatively small claims may seek redress in a single proceeding for the wrong that has been done to the entire class.

See About Securities Class Actions and Shareholder Derivative Actions for more information.