SMall CLaims SUit for SEcurities FRaud?

[O00O]

What is the name of your state? CALIFORNIA

Hello all.

I am a shareholder of a company that was recently sued in Federal District Court for securities fraud, insider trading and making false/misleading statements to the SEC.

I am wondering whether, upon the SEC's successful litigation against the company, I can use that decision as evidence in a small claims suit to recover my losses, via the doctrine of "collateral estoppel."

All told, I invested about $2000 in the company during the time that the SEC alleges these fraudulent activities were occurring.

Thanks very much for your input.


What is the name of your state? CALIFORNIA

 

[efflandt]

I am not a legal expert, but "collateral estoppel" has to do with NOT being able to relitigate an issue between the same or related parties that has been already been decided by the courts (not counting errors which can be appealed), to keep the same plaintiff from repeatedly filing suits for the same thing (like double jeapardy). That does not necessary precude someone not a party to previous suits from filing their own suit.

When there is fraudulent activity in a publically traded company, class action suits often start popping up. So collateral estoppel could prevent you from persuing your own suit if you participate in a class action.

If you start your own suit instead, you would likely need to show your own specific loss, beyond normal movements in that market or sector. Do you think you can prove how much of your undisclosed loss was attributable to fraud, when stock markets have been erratic since late July 2007, and some sectors are down significantly more than others?

 

[tranquility]

No. You may get some issue preclusions, but I can't imagine how that would help you.