• The fraud: This involves a company or its executives intentionally making false or misleading statements to manipulate the stock market. This can include concealing important information that, if known, would have affected an investor’s decision to buy, sell, or hold the stock.

• The class period: This is the timeframe during which the alleged fraud took place. It typically starts when the misleading information is released and ends when the truth is fully disclosed to the public, often leading to a significant drop in the stock price. The class period in the Snowflake Class Action Lawsuit is June 27, 2023 to the close of market on February 28, 2024 (4:00 p.m. EST).

• Investor eligibility: To be included, you must have purchased or sold the company’s securities during the class period and suffered an economic loss.

• Lead plaintiff: A court-approved lead plaintiff represents the entire class, oversees the Snowflake  Lawsuit and has the authority to approve settlements on behalf of all class members.

• Legal basis: These lawsuits are based on federal and state securities laws, such as the Securities Act of 1933 and the Securities Exchange Act of 1934.

• Benefits: Class actions give individual investors leverage against large companies and allow them to share the costs of litigation through a contingency-fee arrangement, meaning the lawyers are paid only if the class wins.

• Participation: Investors who are eligible to join the class do not have to join and can “opt out” to pursue their own individual lawsuit, though this requires hiring and paying a private attorney.

How it Works

• A lawsuit is initiated by one or more investors, called the “lead plaintiffs,” on behalf of a larger group of investors, or the “class”.

• The “class period” is defined as the specific timeframe during which the alleged fraudulent activity took place. Only those who bought or sold the security during this period are eligible to participate.

• A lead plaintiff is appointed to represent the class. Under the Private Securities Litigation Reform Act (PSLRA), the court will typically appoint the investor with the largest financial interest in the outcome of the case.

• The case is litigated, which may include a lengthy discovery phase for gathering evidence.

• The case can be settled or go to trial. Most class actions are resolved through settlements, which can include cash or stock paid into a common fund for the class. The lead plaintiff and class counsel approve any settlement before it is finalized.

Common Types of Misconduct

• Securities fraud class actions can arise from various types of misconduct by a company, its officers, or others involved in the sale of its securities, including:

• Making false or misleading statements in SEC filings, prospectuses, or earnings announcements.  

• Overstating a company’s revenues or profits through fraudulent or “creative” accounting.  

• Failing to disclose material information that would significantly alter an investor’s view.  

• Engaging in market manipulation to artificially inflate or deflate a security’s price. 

What Plaintiffs Must Prove

To succeed in a federal securities fraud class action, plaintiffs must prove several elements:

• Material misstatement or omission: The company made a false or misleading statement, or failed to disclose a material fact.  

• Scienter: The defendant acted with an intent to deceive, manipulate, or defraud. 

• Reliance: The plaintiff relied on the misstatement or omission when buying or selling the security. For publicly traded securities, this can be proven through the “fraud-on-the-market” theory, which presumes the market price reflects all public, material information.

• Economic loss: The plaintiff suffered a financial loss. 

• Loss causation: The company’s misstatement or omission directly caused the plaintiff’s loss, often demonstrated by a stock price drop after the truth is revealed in a “corrective disclosure“

Benefits for Investors

• Participating in a class action allows investors to pool their resources, which offers leverage they would not have in an individual lawsuit against a large corporation

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• The collective approach also makes it more efficient and cost-effective to pursue legal action, especially for smaller investors.

How to Get Involved

• If you bought a security during the alleged class period and suffered a loss, you are generally automatically included in the class. You don’t have to take any action unless you want to file a claim for recovery later.

• You may be notified of a class action by mail if you are an eligible class member.

• You may be able to become a lead plaintiff by applying within 60 days of the first lawsuit being announced.

• If you believe you may have a claim, you can contact a securities class action law firm for guidance.