Have read several of the complaints filed by firms seeking to be the lead plaintiff in a class action suit. All of them seem to focus on two things - Accounting issues, management statements relating to future distributions.
I don't see how accounting issues can even be considered.since so many financial institutions have said they don't have a problem with them. In relation to distributions, claims that the distributions are not sustainable have no basis in fact. Future distributions depend on future performance. In any one quarter management may choose to pay out more than the distributable cash flow in that quarter because of timing issues and knowledge of future revenues. So where are the actual damages? Can you really bring a suit on the basis of a fear that you may be damaged?
Only 1 firm would get to file a Class Action Suite if there is anything.
So they all file suites and look for a Lead Plaintiff.
They also hope to get paid by LINN to go away.
I have seen this with CWH, MHR, etc, and usually they just go away.
If they wait until finding are released by the SEC, it is too late.
If the price recovers how can there be a suit? I guess the firms have to get the wheels turning, to be first, just in case. But I'd guess that if the price recovers or if the underlying suspicion is found to be untrue then they just go away. Like, how can you be guilty if the pps drops simply because of something found later to be untrue. That would be just silly.
One of those.
Here's the problem: Law schools are churning out more lawyers than the country needs. Supply exceeds demand. So you've got bottom feeder lawyers who will chase any lead--no matter how weak--and try to "annoy" a defendant with litigation long enough to get a settlement. If we switched to the English law system (where the loser pays the winners court fees), we wouldn't have this huge problem with frivolous lawsuits. And don't forget that all these lawyer headlines are paid advertisements--not actual newswires.
Unfortunately, the laws in this country are made by the lawyers. So going to an English law model, although probably a good idea, will never happen. I'm waiting for the TV ads on CNBC of law firms trolling for customers for a class action against Linn. That's when you know they're desperate.
I would really like to know how these law firms can file a suit which holds as its basis the SEC review of the accounting methods used by LINN and LNCO. If the results of the review have not yet been published, then there is no basis for a suit. Otherwise, the ups and downs in the stock price are simply the result of market forces. Now, if the SEC holds against the company, then it is a different story, but I don't believe it will happen. Again, it is probably market shorts pushing for a better position.