The high risks and potential benefits—to both companies and investors—of taking securities fraud class actions to a jury were on full display in three rare trials that concluded over two recent months.
Verdicts left Vaxart Inc. investors empty-handed in their suit against a hedge fund that sold its majority stake in the vaccine developer, and denied recovery to Exxon Mobil Corp. shareholders over accounting disclosures. On the other side of the ledger, a jury ordered Elon Musk to pay Twitter Inc. investors their losses—still to be assessed but potentially topping $2 billion—attributed to a pair of social media posts he made before acquiring the company. Musk has vowed to appeal.
These highly variable outcomes—where plaintiffs end up with either nothing or big potential paydays—are very different from the single-digit percentages investors often recover in settlements. Despite the risk, litigants on both sides may develop more appetite for class trials.
Source: Rare Securities Fraud Jury Verdicts Test High-Stakes Strategy