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 future securities class action claims and make a fair purchase offer, enabling funds to monetize future security class action claims payments immediately.
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The Securities 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 securities class action 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 it's Plan of Allocation, a court document that outlines the parameters that must be met in order to be eligible for securities class action settlement funds.
Lake Avenue Capital was founded in 2011 and provides funds the opportunity to immediately monetize their future securities class action claims via a structured buy-out. Lake Avenue conducts in-depth analysis of a fund’s trading history and bids for the right to collect potential future receivables from securities class action settlements. Based on a proprietary valuation model, Lake Avenue quantifies funds’ claims portfolios and offers immediate liquidity in exchange for future settlements payments, ensuring fiduciary compliance for funds that are closing or returning capital to investors.
Challenges in Effectively Executing Comprehensive Claims
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 securities class action 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.
Lake Avenue's Proprietary Securities Claim Valuation Methodology
Due to the sheer volume of account and trade data inherent in today’s markets, the ability to accurately and comprehensively determine future 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.