opt-out lawsuits

Opt-out lawsuits are most often filed by an institutional investor (e.g., a bank, insurer, or pension fund). By making a claim that is separate from the larger class action, an individual plaintiff can sometimes negotiate both a larger and more rapid settlement recovery than if the plaintiff was a more passive beneficiary of the class action lawsuit. In addition, by settling on an accelerated basis, an opt-out plaintiff gets "first dibs" at the defendant's directors and officers (D&O) liability insurance policy proceeds. This is important because the defense expenditures required by complex, protracted securities litigation rapidly depletes and frequently exhausts D&O policy limits, often before monies are available to make actual claim settlements.