Sue 'Em for Fraud?

Shareholder suits are for the lawyers, but here is how to get the most out of your class action

Even in a bull market, individual stocks can tank and leave small shareholders devastated. Recent examples include the staggering 84% decline at small-appliance maker Sunbeam and a 66% drop at franchise operator Cendant, where just last week chairman Walter Forbes resigned under pressure. Both are widely held stocks, and, predictably, both now face scores of lawsuits that allege accounting fraud. Ultimately, the cases against both will become class-action affairs and so serve all who owned the stocks before their meltdown. But even if the suits succeed, the overwhelming odds--and this is true in any suit over a stock gone bad--are that...

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