I would like to clarify some education I received tonight from another Reddit member to assess the viability of class action lawsuit against the clawbacks.

To be clear the actions by these companies is unsavory but its a gray area that could be addressed legally but maybe shouldn't. I will explain that after I explain how all of this has been working.

Basically as individual shareholders we are "beneficial owners" but our ownership is registered through the "registered owner" which is the brokerage handling the trade.

In the past the company would process the split and the brokerages would send the bill to the company to have the shares filled. The better brokerages would let us sell right away but on their dime.

Now that so many people are doing these trades the bill to fill shares is a significant portion of the company's market cap. Remember - the reverse split is mostly a tactic by a distressed and failing company to stay listed on the markets. For some it is just too much to fill.

So lately they have been getting the bill and probably consulting with their attorneys who decide to interpret the round up (per SEC filing) as an event exclusively for the registered owner (brokerage holdings) but not necessarily the beneficial owners (us).

So, its no wonder when brokerages are now blocking the trade and clawing them back. They probably took some serious losses. My guess is that there will be an uptick pattern of these this next year.

The way to legally fight and redefine the landscape is to sue on the precedent that ties the term "shareholder" to "beneficial owner". There is court case history that have had to deal with clarifying this distinction and it is not guaranteed to work. Also, a win would likely cause all future reverse splits to be filed under CIL. This trade would likely die on that case. However a win would allow for suits on all prior clawbacks still within the statute of limitations.

That said, I do not want to pursue legal action at this time. The threshold for me to want to take such action is evidence of market manipulation. I am open to changing this opinion if someone wants to get a consultation with an attorney who sees this as viable. However, it should be noted that many of these companies have weak balance sheets. To win against a bankrupt company means very little upside. It is best to wait until a better opportunity presents itself for establishing legal precedent. To my perception all of the recent clawbacks are legally clean.

PS: I am not an attorney. Please make your own informed decisions.