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Claims Monetization

Lake Avenue Capital works with institutional investors that are currently in liquidation or returning capital to investors to structure a buy-out of their future securities class action settlement claims. Although securities class action claims are typically a low priority for firms due to the unpredictability of payout amounts as well as long lead-times for disbursement, they can be an important contributor to a fund’s bottom line. Lake Avenue works with investors to value the claims and make a fair purchase offer, enabling funds to monetize future claims payments immediately.

Litigation Landscape

Each year, over 200 securities class action litigations are initiated in the US alone. As these cases move through the legal process, they are either dismissed or settled, with an extremely small number progressing to trial. In the cases that settle, damaged investors are eligible to receive a portion of the settlement. In order for investors to collect the settlement funds to which they are entitled, they must file claims forms with the claims administrator for each case and provide proof of their claim to the court. Each settlement is distributed in accordance with its Plan of Allocation, a court document that outlines the parameters that must be met in order to be eligible for settlement funds.

Due to the complexity of the Plans of Allocation, the long lead time from stock price drop to eventual settlement fund distribution (multiple years) and the technological challenges inherent in modern day trading, firms face a significant challenge in effectively executing a comprehensive claims filing and recovery effort. The litigation process and extended timelines make tracking cases, along with the status of each, practically an impossible task for institutional investors.

Due to the sheer volume of account and trade data inherent in today’s markets, the ability to accurately and comprehensively determine securities class action claims eligibility is incredibly complex. Each securities class action settlement has its own unique set of terms that must be applied to historical trade data. Lake Avenue Capital utilizes a proprietary valuation methodology in order to present funds with an offer of purchase for their future class action settlement claim payments, enabling them to properly close out a fund or portfolio and monetize future claims for investors.