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Re:Tesla, Musk must face shareholder lawsuit over going-priv... by nickff on Wednesday April 15, 2020 @08:06PM (#22884662)
Shareholder class-action judgements do take money from the company, and give it to both the shareholders, and their lawyers. The problem is that from the point of view of a long-term shareholder, it is taking money from one pocket, and putting it in the other (after compensating the lawyers for their trouble). Short-sellers will almost certainly not be in a class of shareholders, as they only hold the stock for a very brief period before selling it, and then only for a brief period before returning it to their counter-party; if they hold it longer, they are not short-sellers.

Among the shareholder class, there are a few different categories, each wins or loses a different amount due to the class-action:

1) Those who owned the stock at the time of the misrepresentation and continued to own it until the judgement/settlement. These people lose their portion of the lawyers' fees

2) Those who owned the stock at the time of the misrepresentation and sold it before the lawsuit ended. These people benefit from the judgement/settlement amount, minus lawyers' fees.

3) Those who did not own the stock a the time of the misrepresentation, but bought it before the end of the lawsuit. These people lose however much group 2 gained, in addition to some legal costs.

Out of the three groups, 1 and 2 are part of the class, but only 2 benefits from a successful complaint.

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