Costly business – Shareholder damages in securities litigation

Description

Abstract: Securities litigation can be costly to public companies, especially when the shareholders band together in class actions to accuse companies and their boards of directors of inflating stock prices through material misrepresentations or omissions. Calculating damages in securities fraud cases can be quite complicated and even vulnerable to attack by opposing parties. This article explains why a shareholder must evaluate the options and a financial expert must establish loss causation. A sidebar notes that, when computing shareholder damages in securities litigation, financial experts often use models that rely on event studies.