Why Should Institutions Get Involved?
How Can Institutions Get Involved?
- Institutional fiduciaries oversee the financial security of their funds. As such, they must take reasonable steps to monitor all real and potential claims arising from fraud and malfeasance by corporate wrongdoers.
- Better results. Since the passage of the Private Securities Litigation Reform Act of 1995 - which specifically encouraged institutional investors to participate as lead plaintiffs in securities class actions - settlement recoveries have increased dramatically. In fact, a recent study by NERA Economic Consulting revealed that securities class actions with institutional investors as lead plaintiff, settled for one-third more than those with individual investors serving as lead plaintiff.
- Institutional investor involvement is on the rise. A 2004 study by PriceWaterhouseCoopers indicated that approximately 47% of the lead plaintiffs in all cases filed in 2004 were institutional investors.
- Institutions typically are able to negotiate larger settlements while simultaneously lowering attorney fees, both of which increase recoveries for investors.
- Institutions frequently bring a certain level of sophistication and experience to each case which often proves to be an asset in developing litigation and trial strategy or negotiating a settlement.
- Corporate Governance available to institutional investors to obtain extensive and significant corporate governance, such as:
- Mandate annually elected Boards controlled by independent directors;
- Separate Chairman of the Board and CEO offices;
- Require that at least two-thirds of the Board shall be independent directors;
- Require immediate public disclosure of all sales or purchases of a company's stock by any corporate officer or director;
- Establish director term limits;
- Limit the number of boards a director may sit on;
- Eliminate "super-voting" classes of stock;
- Restrict/limit stock options;
- Rotate outside auditors; and
- Limit executive compensation.
The best way for institutional fiduciaries to protect their investments and to maximize the recovery of lost assets is to actively monitor market developments. Recognizing that this is a time consuming and expensive process, Kessler Topaz Meltzer & Check, LLP offers a monitoring service designed to enable institutions to identify important events in the marketplace and discuss what effect, if any, those events have on their investments. Kessler Topaz Meltzer & Check, LLP will discuss the merits of claims filed as well as potential claims, and evaluate all legal rights and options recovery. This service allows institutional investors to efficiently assess all claims and to take any steps necessary to protect assets, without disrupting their business. There is no cost or obligation for this service and Kessler Topaz Meltzer & Check, LLP handles all class actions on a fully contingent basis. Kessler Topaz Meltzer & Check, LLP is only paid if the litigation is successful and, win or lose, Pennsylvania law allows for the responsibility for all costs and expenses to rest with us.
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