Investors in Class-Action Lawsuit Smelled a Fishy Situation
A recent $65 million settlement involving SeaWorld showed why having the right partner and tools at hand is so important to fund managers
When the film Blackfish was released in 2013, only three years had passed since a killer whale had been involved in the death of a trainer at SeaWorld in Orlando. The film did not paint a particularly rosy picture of life for orca’s in captivity. It was an open question whether SeaWorld realized the reputational hit it took from the film, but a securities fraud class action against the organization (and Blackstone Group, which held a stake in SeaWorld through March 2017) alleged otherwise.
More than five years of hard-fought litigation paid off earlier this year when the U.S. District Court for the Southern District of California granted preliminary approval of a $65 million class action settlement brought on behalf of SeaWorld Entertainment, Inc. shareholders. Since December 2014, Kessler Topaz served as co-lead counsel in the litigation.
Challenge and opportunity for asset managers
In 2019, there were 428 securities class-action lawsuits filed in the U.S., each with the potential to have significant impact on investors and asset managers. Considering the years that such suits take to play out, at any moment there are thousands of them in motion just in the U.S. – far too many for asset managers to stay actively engaged to ensure their funds’ financial security, maximize value, and fulfill fiduciary obligations. At least without the right partner.
Asset managers face endless responsibilities and opportunities related to these class actions, and what might be the best way for time-starved legal and operations professionals to stay on top of it all is need a single-source platform. SecuritiesTracker is a secure and comprehensive platform combining portfolio monitoring, claims filing, legal analyses and recommendations, and case evaluations to guide fund managers to quickly determine how best to monetize claims and avoid leaving money on the table. The goal of SecuritiesTracker is to obtain the best possible return from their funds’/clients’ claims arising from securities class actions, anti-trust actions, or the growing number of non-U.S. actions.
Certainly, it was a useful tool for managers in remaining aware of all the relevant developments in the SeaWorld calls action. In that case, it was alleged that, in violation of Section 10(b) of the Exchange Act of 1934, SeaWorld and its former executives issued materially false and misleading statements about the impact on SeaWorld’s business of Blackfish. Defendants repeatedly told the market that the film and its related negative publicity were not affecting SeaWorld’s attendance or business at all. When the underlying truth of Blackfish’s impact on the business finally came to light in August 2014, SeaWorld’s stock price lost approximately 33% of its value in one day, causing substantial losses to class members.