Securities Fraud Class Actions: Key Details You Need to Know!

Many investors still have questions about 'securities class actions.' Below, we outline several of the most critical issues: ❓ What is the Lead Plaintiff Deadline? Applications to serve as lead plaintiff must be filed within 60 days after the lawsuit is initiated; applications submitted after this deadline will not be accepted. If you wish to seek appointment as lead plaintiff, it is advisable to contact counsel well in advance. ❓ Why Become the Lead Plaintiff? The lead plaintiff represents all investors and holds greater negotiating leverage, enabling more effective advocacy for higher compensation. ❓ What Form Does Compensation Typically Take? Most securities fraud cases settle, with compensation usually provided in cash, shares, or a combination thereof—distributed proportionally according to each investor’s losses. ❓ Must I Continue Holding the Stock Until the End? No. Even if you sold your shares, you remain eligible to participate—as long as you purchased them during the class period. ❓ What Evidence Must I Provide? The best supporting documents are trade confirmations or brokerage account statements. Be sure to retain these carefully for submission during the claims process. ⏳ How Long Until a Resolution? Typically 2–3 years—but timelines vary significantly across cases.

If a Shareholder Breaches a Commitment and Causes Losses, Can Investors Claim Full Compensation? A Guide to Asserting Rights in Securities Misrepresentation Cases

Investors need not proactively ‘segment’ their losses into portions attributable to the breached commitment versus other factors. So long as you purchased shares after the commitment was made and held them through the disclosure of the breach—suffering losses in the process—you may assert that causation has been established. If the listed company seeks to deduct part of your losses, it bears the full burden of proof to demonstrate the existence of entirely independent adverse factors wholly unrelated to the breached commitment. Absent such evidence, no deduction is permissible. III. Deduction for Systemic Risk: Judicial Discretion and Evidentiary Contest Unlike derivative risks, systemic risk arises from external factors independent of the breached commitment. Article 31 of the Supreme People’s Court’s Provisions on Several Issues Concerning the Trial of Civil Compensation Cases Involving False Statements in the Securities Market establishes the risk-deduction rule: where the defendant proves that part or all of the plaintiff’s losses resulted from systemic risks in the securities market—or from other factors such as the listed company’s internal/external business environment—the defendant’s liability for compensation may correspondingly be reduced or eliminated. Drawing on the first-instance judgment in the Songdu Co., Ltd. case, investors should grasp two key principles: First, courts retain discretion in determining the deduction percentage for systemic risk—even absent rigorous evidentiary submissions by the defendant, courts may independently assess and adjust the deduction based on overall market and sector index trends. In this case, the court ultimately exercised its discretion to deduct 40% of the claimed losses. Second, while the principle of strict liability determines whether liability exists at all, it does not preclude application of the systemic-risk deduction rule when quantifying damages. Although the promisor cannot evade liability by asserting lack of fault, it may nonetheless rely on broad market declines to reduce the amount payable. In practice, defendants frequently cite ‘broad market declines’ or ‘company-specific negative news’ as pretexts to minimize compensation. Investors should proactively counter such arguments with data, striving to compress the deduction ratio to the lowest possible level. IV. Practical Tips for Investor Rights Protection: Three Core Strategies to Maximize Full Compensation Strategy One: Distinguish between ‘derivative adverse events’ and ‘independent adverse events,’ emphasizing the chain of causation. Where the downward price pressure stems directly from the controlling shareholder’s breach of commitment—and manifests as secondary consequences—investors should firmly oppose any deduction. This logic has already received principled judicial recognition and constitutes the strongest leverage in rights protection. Strategy Two: Compare the stock’s decline against broader market and sector indices to narrow the defendant’s room to reduce compensation. Prepare comprehensive market data in advance to demonstrate that your stock’s decline during your holding period far exceeded concurrent declines in both the overall market and its respective sector index—clearly indicating that the bulk of your losses stemmed from the company’s breach rather than general market conditions, thereby substantially lowering the court’s discretionary deduction percentage. Strategy Three: For delisted stocks, lock in the optimal benchmark date for calculating losses. After delisting, trading on the over-the-counter ‘Old Third Board’ suffers extremely low liquidity and severely distorted pricing. In litigation, investors may argue for using the last trading day before delisting as the benchmark date for loss calculation—thereby avoiding further erosion of compensation due to post-delisting price collapses. Before filing suit, systematically compile the commitment announcement, your transaction records, and concurrent market or sector index data—to fully arm yourself for contesting loss causation. Frequently Asked Questions for Investors Q: If a major shareholder breaches a commitment and I suffer losses after purchasing shares, am I guaranteed full compensation? A: Not necessarily ‘full’—but the threshold for establishing causation has been significantly lowered. The Songdu Co., Ltd. and Jinli Tai cases confirm that purchasing shares after the commitment was issued and holding them through the disclosure of the breach—while suffering losses—gives rise to a presumption of transaction causation. Whether compensation is awarded—and how much—depends on judicial determinations regarding loss deductions. Q: Will losses caused by broad market declines be deducted?

Pomerantz Law Firm Investigates Braskem S.A. Regarding Securities Fraud Claims

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Pomerantz LLP is investigating potential securities fraud claims against Braskem S.A. following significant stock price declines linked to widening losses and a 'going-concern' warning due to rising debt.

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