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Technology Stocks : Adaptec (ADPT)

ADPT 17.10

-8.5%

Dec 3 3:59 PM EST

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To: Schmedley who wrote (937)	1/23/1998 12:51:00 PM
From: Bargain Hunter	Read Replies (4) of 5944

<<In truth, just how many of these "class action" lawsuits ever come to fruition.>> Depends what you mean by "fruition". I have (unwillingly) been part of the class of several of these lawsuits over the years. In every case there has been a settlement. In the cases where I elected to stay in the class the payoff was laughably small. The way it works is that the shareholder doesn't hear anything until the settlement has been tentatively agreed. The announcement is carefully timed such that the shareholder can effectively choose only between electing out of the class (and preserving an individual right to sue) and joining the class and receiving a pittance. The truth is that these lawsuits damage the class far more than any supposed damage caused by the defendants. The companies have little choice other than to settle because the lawyers are able to flood the company with so many requests for information that it detracts significantly from running the company. What we need is to make it harder for the lawyers to get a suit designated as a class action suit. If we could organize early in the process and impress upon the court that the supposed victims do not wish to be further victimized by attorneys seeking to help them, perhaps fewer of these suits would ever become class actions. The court should require a very high degree of suspicion of wrongdoing before allowing a class action suit. Or the proportion of the money allowed to the lawyers in a settlement, as opposed to a judgement, should be lower. We need legislation that allows class action suits where people willingly join the class early in the process, but that restricts the ability of lawyers to negotiate on behalf of a class of people who have not yet joined the suit.

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