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Class Action info posted by me elsewhere:
I'll try Cav, but class actions are NOT my area of law. This is kind of like asking a back doctor to look at your foot... However, here is some 'off the cuff' info:
Several firms will file as soon as the SEC files notice that a stock has been suspended for potentially manipulative stock activity. Lawyers want money for their forms, and will have a justifiable belief the claims are valid because the SEC has acted. The filing of suits is wholly unsurprising. It's what these firms do whenever this situation arises.
Eventually one or more of these class actions suits will be certified. Certification here will not be an issue, as under Rule 23 all that needs to be done is define the class and show a common question of law or fact... it's not an issue for the plaintiff firms.
At certification, other suits filed will be combined into one, both for judicial efficiency and because there is a minimum number needed to be viable. I really haven't followed up in the last few days to see if one is certified by a judge yet or not although I do not believe that to be the case as of yet. Sorry, only have a small holding here left and been busy at work and focused on other plays right now...
As to the merits of the case, I perused the filings of ACER.
Concerning the one where Gerald Young is the plaintiff, you see beginning on page 5, numbers 17-27 list what the plaintiff (class action) claims are 'false and misleading’ statements by GrowLife.
The majority of them relate to share based compensation for the BOD and execs, who got the shares, how much they were worth upon issuance, and how much was reported on 10k's. The others are from PR's, looks like Rocky Mountain Hydro (stores bought from Hunt) and the shares paid for same… and how they were reported on the 10k's.
Interesting that the company's first act was to cancel the executive compensation based on 2M of stocks to 4 different executives at .02. If may be part of 'GrowLife 2.0' but also part of damage control for the pending lawsuit. Probably a combination of the two.
The second suit where Romero is the plaintiff alleges the same… accusations are that issuance price of common stock to BOD and execs (from Sterling on down…) were reported improperly on 10k's.
As far as veracity, we will see. These are only allegations at this point, and now GrowLife must respond. If it proceeds from there (not dismissed) then details will come out in discovery. After discovery, class actions like many cases often settle out of court. Of course, it may proceed to trial but that's wayyyyyyyy down the road. These things take months and sometimes years.
Here's something to note though on the likelihood of trial: Since the enactment of the Private Securities Litigation and Reform Act (PSLRA) in 1995, trials in securities fraud cases have been rare. Only a handful of such cases have gone to verdict since the passage of the PSLRA.
cut and paste from Wikipedia on what the PSLRA is
The PSLRA was designed to limit frivolous securities lawsuits. Prior to the PSLRA, plaintiffs could proceed with minimal evidence of fraud and then use pretrial discovery to seek further proof. This set a very low barrier to initiate litigation, which encouraged the filing of weak or entirely frivolous suits. Defending against these suits could prove extremely costly, even when the charges were unfounded, so defendants often found it cheaper to settle than fight and win. Under the PSLRA, however, plaintiffs need more proof of fraud before they can initiate a suit. This makes it very difficult to file a frivolous suit, but it also makes it much harder to file legitimate ones, as plaintiffs are forced to present evidence of fraud before any pretrial discovery has taken place.[1]
The PSLRA imposes new rules on securities class action lawsuits. It allows judges to decide the most adequate plaintiff in class actions. It mandates full disclosure to investors of proposed settlements, including the amount of attorneys' fees. It bars bonus payments to favored plaintiffs and permits judges to scrutinize lawyer conflicts of interest.
It's better for shareholders now as opposed to before, IMO.
Most of these filings are firms looking to certify, rattle a cage and get a settlement. We as shareholders will get very little of that settlement money. The only one who makes money here are the firms who file to 'protect' us... but really, they are doing their job making money for their firm not the shareholder.
If it does go to trial, the money cost to litigate further reduces any amount we as shareholders receive. As stated above, this is the longer shot.
Hope this helps at all, not my legal area whatsoever but this is what I know from law school classes and from talking to some colleagues.
Sidenote: selling does not preclude participating in CA's. To bring a valid securities class fraud action claim, you must have purchased your stock during the class period and suffered losses as a result of the alleged fraud. You are not required to have held your stock throughout the entire class period or to continue holding your shares today to file or obtain recovery in a securities fraud class action.
TM
I'll try Cav, but class actions are NOT my area of law. This is kind of like asking a back doctor to look at your foot... However, here is some 'off the cuff' info:
Several firms will file as soon as the SEC files notice that a stock has been suspended for potentially manipulative stock activity. Lawyers want money for their forms, and will have a justifiable belief the claims are valid because the SEC has acted. The filing of suits is wholly unsurprising. It's what these firms do whenever this situation arises.
Eventually one or more of these class actions suits will be certified. Certification here will not be an issue, as under Rule 23 all that needs to be done is define the class and show a common question of law or fact... it's not an issue for the plaintiff firms.
At certification, other suits filed will be combined into one, both for judicial efficiency and because there is a minimum number needed to be viable. I really haven't followed up in the last few days to see if one is certified by a judge yet or not although I do not believe that to be the case as of yet. Sorry, only have a small holding here left and been busy at work and focused on other plays right now...
As to the merits of the case, I perused the filings of ACER.
Concerning the one where Gerald Young is the plaintiff, you see beginning on page 5, numbers 17-27 list what the plaintiff (class action) claims are 'false and misleading’ statements by GrowLife.
The majority of them relate to share based compensation for the BOD and execs, who got the shares, how much they were worth upon issuance, and how much was reported on 10k's. The others are from PR's, looks like Rocky Mountain Hydro (stores bought from Hunt) and the shares paid for same… and how they were reported on the 10k's.
Interesting that the company's first act was to cancel the executive compensation based on 2M of stocks to 4 different executives at .02. If may be part of 'GrowLife 2.0' but also part of damage control for the pending lawsuit. Probably a combination of the two.
The second suit where Romero is the plaintiff alleges the same… accusations are that issuance price of common stock to BOD and execs (from Sterling on down…) were reported improperly on 10k's.
As far as veracity, we will see. These are only allegations at this point, and now GrowLife must respond. If it proceeds from there (not dismissed) then details will come out in discovery. After discovery, class actions like many cases often settle out of court. Of course, it may proceed to trial but that's wayyyyyyyy down the road. These things take months and sometimes years.
Here's something to note though on the likelihood of trial: Since the enactment of the Private Securities Litigation and Reform Act (PSLRA) in 1995, trials in securities fraud cases have been rare. Only a handful of such cases have gone to verdict since the passage of the PSLRA.
cut and paste from Wikipedia on what the PSLRA is
The PSLRA was designed to limit frivolous securities lawsuits. Prior to the PSLRA, plaintiffs could proceed with minimal evidence of fraud and then use pretrial discovery to seek further proof. This set a very low barrier to initiate litigation, which encouraged the filing of weak or entirely frivolous suits. Defending against these suits could prove extremely costly, even when the charges were unfounded, so defendants often found it cheaper to settle than fight and win. Under the PSLRA, however, plaintiffs need more proof of fraud before they can initiate a suit. This makes it very difficult to file a frivolous suit, but it also makes it much harder to file legitimate ones, as plaintiffs are forced to present evidence of fraud before any pretrial discovery has taken place.[1]
The PSLRA imposes new rules on securities class action lawsuits. It allows judges to decide the most adequate plaintiff in class actions. It mandates full disclosure to investors of proposed settlements, including the amount of attorneys' fees. It bars bonus payments to favored plaintiffs and permits judges to scrutinize lawyer conflicts of interest.
It's better for shareholders now as opposed to before, IMO.
Most of these filings are firms looking to certify, rattle a cage and get a settlement. We as shareholders will get very little of that settlement money. The only one who makes money here are the firms who file to 'protect' us... but really, they are doing their job making money for their firm not the shareholder.
If it does go to trial, the money cost to litigate further reduces any amount we as shareholders receive. As stated above, this is the longer shot.
Hope this helps at all, not my legal area whatsoever but this is what I know from law school classes and from talking to some colleagues.
Sidenote: selling does not preclude participating in CA's. To bring a valid securities class fraud action claim, you must have purchased your stock during the class period and suffered losses as a result of the alleged fraud. You are not required to have held your stock throughout the entire class period or to continue holding your shares today to file or obtain recovery in a securities fraud class action.
TM
