First in Class

A "first" for me ...

Over the years, I received a fair few class-action notices which invited me to apply for compensation in a lawsuit against companies whose shares had fallen sharply. Typically these came from the dot-com days.

Until now, I have universally binned these forms for a number of reasons.

One reason is that I do not agree with the principle of it. In my view, equity buyers know what they are letting themselves in for - shares can go down, sometimes precipitously. And if the reason was mismanagement, or even fraud by the directors, well that is one of the risks of share ownership.

Also it is profoundly illogical to sue company X to seek compensation for shareholders of X.

Other reasons included the fact that the amounts involved were somewhat small - my losses were modest (a few thousand dollars at the most) and of course the recovery in the lawsuit would be a fraction of that. Plus, it would take years to come through, if at all. I think 5 - 15 years from suit-to-cash is about the range.

But, when I received a class action notice relating to Xerox (the suit was filed in 2000, relating to trading in 1998 - that's how long these things take !) I decided to give it a go.

In this case, the lawsuit itself seemed slightly more meritorious and KPMG are held partly to blame and are putting in some of the money (although most of it, still, comes from Xerox themselves - I still do not see how that makes sense). Plus, my loss and expected recovery seems like it will at least cover the postage (£1.22). I think I might get about £200 eventually although I would not count on receiving it for another 2 years at least.

I need to get income from whatever source these days !