A securities class action lawsuit is related to an issue in which many shareholders of a company may have suffered the same injury or other problem flowing from one activity done by the company. Usually a securities class action is filed when shareholders assert that the company or one of its executives or board members has taken some action that has reduced the value of the stock or that the company itself has done taken some action to interfere with the rights of the shareholders. A securities class action is filed like any other lawsuit, except that the class has to be established in order for each of the potential plaintiffs to participate. Usually this means the securities class action lawsuit has two distinct parts. In the first part of the class action the class itself is defined, meaning the actual plaintiffs entitled to sue for damages is established. In the second part of the class action lawsuit the court or jury determines whether there is liability and what the damages should be. If the securities class action lawsuit is successful, or a settlement is reached, usually all the people in the class receive a damage award.

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