When an attorney drafts a lawsuit against corporate wrongdoers, the attorney first looks for bad news that results in a precipitous drop in the Company’s share price. The bad news is called a “corrective disclosure,” because the news corrects the market price of the stock to where it should have been but for the fraud. The day before the corrective disclosure is the final day of the class period because anyone purchasing stock after that day is on full notice of the wrongdoing and therefore not a victim of the fraud. The beginning of the class period is the day the attorney, after reviewing the Company’s prior public statements, determines that corporate executives first knew of the information in the corrective disclosure but hid the information from the public.
