Fund Managers Should Not Overlook Participating in Class Actions

Determining eligibility for, and participation in, class action lawsuits can be a time-consuming and difficult process for fund managers focused on executing their core strategies. As part of their fiduciary duty, however, managers must ensure that they participate in class action litigation when appropriate and maximize value for investors. Many managers are not even aware of pending cases, but they should be considering and taking advantage of all available sources of recovery for investors. A recent GAIM Ops Digital program provided an overview of the current class action landscape; explored how class action service providers can streamline the process of participating in class actions and help managers avoid leaving money on the table; and offered guidance on selecting an appropriate vendor. Cosimo Montagu, editor-in-chief of GAIM Ops Events, moderated the discussion, which featured Julio Garcia, founding partner of FLSV Fund Consulting Services, LLC, and Michael J. McCreesh, president of Battea Class Action Services. This article distills their insights. For more on class action litigation, see “Sidley Briefing Outlines Recent Regulatory and Enforcement Developments Relevant to Private Fund Advisers” (Apr. 23, 2020); “Fund Managers Must Evaluate Their Claims Policies to Avoid Breaching Fiduciary Duty” (Jan. 30, 2020); and “When Can a Hedge Fund Shareholder Opt Out of a Class Action Settlement to Pursue Its Own Remedies When a Court Has Certified the Class As a Non-Opt-Out Class?” (Jan. 17, 2013).

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