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The judge found that the directors had a duty to make “a good faith judgment that the corporation’s information and reporting system is in concept and design adequate to assure the board that appropriate information will come to its attention in a timely manner as a matter of ordinary operations…” so that it can satisfy its duty of care. If the directors failed to attempt in good faith to insure that the firm had an adequate information and reporting system, the Chancellor stated that this could render them “liable for losses caused by non-compliance with applicable legal standards.” Moreover, if the directors put a system in place, and subsequently learned that it was inadequate, then they would have a duty to make a good faith determination about how best to correct the system’s failure.
In a recent Stanford Law Review article, “Letting Billions Slip Through Your Fingers”, the authors prove that institutional investors are not filing claim forms. “We find that less than thirty percent of institutional investors with provable losses perfect their claims in these settlements.”
Most large firms now rely on their custodians or burden their in house legal department to file claims. Professors Cox and Thomas prove that this is not working. Less than 30% of all claims that could be filed are currently being submitted. The money intended for the other 70% is paid to the 30% who do file correctly. THE MOST SIGNIFICANT FINDING OF THE STUDY IS ALTHOUGH RESPONDENTS KNEW THAT MANY CLAIMS ARE NOT FILED; THEY WERE CERTAIN THEIR’S WERE BEING SUBMITTED. The study finds 70% of the claims have not been filed, that means it is improbable that all of your claims were filed. We will check to make sure all claims are submitted, there is no charge unless we make a recovery.
“Letting Billions Slip Through Your Fingers: Empirical Evidence and Legal Implications of the Failure of Financial Institutions to Participate in Securities Class Action Settlements” by James D. Cox and Randall S. Thomas
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