PROBLEMS WITH MADOFF CLASS ACTION LITIGATION

Class actions are a popular venue for aggregating claims but present certain inherent problems.

1. Delay and the need for uniform treatment

A class action must first be certified by the court after proof that there are common factual and legal issues.  Basically all are treated alike.  Thus, active and passive investors are treated equally with distinctions likely only based upon the amounts lost.  class action usually take longer than other cases because the claim must first be certified and cases are only settled with court approval and notice to all involved. A 100 million settlement may seem historic and imposing until one sees that it involves compensation of only 5 or 10% of losses.

2. Settlement

In contrast to the class action, individual claims may be separately settled without court approval.

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