There are many parts of the securities class action claims filing process that can fail. In our experience working with institutional investors, this inevitably occurs when entities attempt to file on their own, and often if they rely on their custodian as well. In fact, industry statistics show that on average over 60% of the available funds have gone unclaimed over the last decade, which equates to billions of dollars each year.
Why is this occurring? The short answer is that errors and omissions can and do occur at each stage of the filing process, and in most cases firms cannot tell what is missing or incorrect.
There are four primary stages to the class action claims filing process: identification, analysis & matching, filing, and allocation. The following illustrates some of the most common failure points:
1. Identification: the process begins with the responsible party identifying active securities class actions which may apply to positions that have been held by the firm in the past. This is the first point at which the process can fail:
a. Notifications commonly do not get delivered to the responsible party for various reasons:
i. Paper-based notifications are lost or returned to sender
ii. Notifying firms lacking correct contact or custodial information
iii. Intermediaries / past providers fail to forward all notifications
b. Notifications that are delivered may be discarded because they are assumed to be:
i. Irrelevant / not applicable to positions actually held
ii. Not likely to result in material payments
iii. Mistaken for junk mail / email
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