What is a shareholder class action?

A shareholder class action is a type of legal action in which a large number of shareholders of a company join together to sue the company for damages. These shareholders, often referred to as class members, are suing due to an alleged wrong by the company, such as false or misleading statements or mismanagement of company funds. In Virginia, all potential class members must have bought shares of the company during the time period during which the wrongdoing is alleged to have occurred. In most cases, this is the period between the date of the wrongful act and the date that the shareholder first became aware of the wrongdoing, though there can be some variations. When the class action is successful, the shareholders are usually entitled to financial compensation. The amount of money they can expect to receive is based on the number of shares they have and the amount of money the company is found to have wrongfully gained. Additionally, shareholders may be able to get the company to pay the legal fees incurred in bringing the class action. Ultimately, a successful shareholder class action is one way for people to hold corporations accountable for their actions. It is also a form of legal protection for shareholders, allowing them to join forces and take action when a company breaks the law.

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