The following checklists outline key considerations when evaluating involvement in securities matters, determining the appropriate level of participation, and protecting against fiduciary liability. 

For more context on how Wolf Popper supports fiduciaries through monitoring and legal analysis, see How Portfolio Monitoring Works.

Factors to Consider Before Getting Involved in Securities Actions

Before deciding whether to participate in a securities class action, pursue a separate action, or remain uninvolved, fiduciaries should evaluate the following:

Size of the Potential Loss

Assess the financial impact to your plan or fund to determine whether involvement is warranted.

Leadership by Other Investors

Consider whether another institutional investor has stepped forward to lead the action and whether that investor is equally or better positioned to serve as lead plaintiff.

Ability to Retain Counsel in a Timely Manner

Determine whether your institution can engage qualified counsel within the required timeframe and on terms favorable to your constituents.

Alignment of Claims with the Class

Confirm that your claims align with those of other class members (e.g., timing of purchases, class period, and security type). Misalignment may affect adequate representation.

Strength of the Legal Claim

Evaluate the underlying legal theories, potential defenses, and likelihood of success.

Ability to Recover Assets

Consider the financial condition and location of potential defendants’ assets, including whether recovery is more viable in the U.S. or abroad.

Degrees of Involvement in a Securities Class Action

Fiduciaries may engage in different ways depending on institutional priorities, resources, and the significance of the matter. Levels of involvement include:

• Serving as Lead Plaintiff in a class action
• Opting out of the class and pursuing an independent action—either early in the case or after a settlement, individually or with other investors
• Providing support to the litigation without direct involvement
• Participating as Amicus Curiae
• Submitting affidavits in support of the plaintiff class
• Acting as an observer, monitoring litigation progress through resolution
• Taking steps to ensure your fund or plan recovers settlement proceeds
• Seeking to assume the lead role if the existing lead plaintiff is inadequate or atypical
• Objecting to or opting out of a settlement if it is not in the best interests of your constituents or the class

 

Steps to Protect Against Fiduciary Liability

To mitigate potential liability and demonstrate prudent oversight, fiduciaries should:

Vet Advisors Thoroughly

Ensure advisors are competent, experienced, and able to meet fiduciary standards.

Understand Portfolio Risks

Stay informed about the nature, balance, and risks associated with plan or fund investments.

Implement Strong Monitoring Controls

Maintain systems to monitor investments from both a financial and legal standpoint.

“Monitor the Monitors”

Establish oversight of the professionals or entities overseeing investments.

Investigate Potential Claims

Review possible fraud, derivative, or corporate governance-related claims, consult with qualified counsel, and make informed decisions about whether to pursue them.

Document All Decisions

Maintain detailed records to demonstrate good-faith decision-making and a reasonable basis for actions taken or declined.

Contact Us

If you’d like guidance on any of these considerations—or support evaluating potential claims, recovery options, or fiduciary exposure—contact us to discuss how we can assist your institution.