A media release relating to a proposed action against a company called Questor alleges that the company and its management failed to disclose the extent of clinical evidence available in relation to a drug called Acthara and that is "engaged in risky tactics to promote the sale and use of Acthar."

The media release says "On 19 September, 2012, the stock commentary website Citron Research reported that Aetna Inc. ("Aetna"), one of the nation's largest insurers, had recently revised its policy concerning Acthar, which would severely limit coverage of Questcor's primary drug. In Aetna's clinical policy bulletin issued in connection with its review, Aetna reported that studies suggested that the drug is only "medically necessary" for West syndrome, a rare condition that causes infantile spasms, and not for other indications, such as MS, that are treated with steroids. "

The statement goes on "On this news, Questcor's stock plummeted USD24.17 per share to close at USD26.35 per share on 19 September, 2012, a one-day decline of 48%. Then, on 24 September , 2012, Questcor announced in a Form 8-K filed with the SEC that the U.S. government had initiated an investigation into the Company's promotional practices. After this news, Questcor's stock dropped USD11.05 per share to close at USD19.08 per share on 24 September, 2012, a one-day decline of 37%.

Those falls are spectacular. But regulators are only beginning to consider if the company was in any way at fault. No criminal prosecution is under way, despite the law firm's prominent claim that it is "investigating potential securities fraud at Questcor Pharmaceuticals, Inc."

What is actually happening is a jockeying for position: it is usual for other firms to immediately announce their own "investigation" once one firm jumps the gun.

But Faruqi has, unusually, placed a limit on the class that it is prepared to represent. The usual class action approach is "the more the merrier." But that's not what the firm plans to do: it plans to represent only those who claim to have lost more than USD100,000 when the share price fell. The reason is simple: in a contingency fee funded action, everyone has to receive the same level of service, including investors who may have held only a few shares. While their percentage loss is the same, their monetary loss is less. Given that the fees are taken from the pot before it is divided, big winners end up subsidising small winners, often to the extent that, if there was no class action, the smaller shareholders would not receive any compensation after payment of fees.

And so, Faruqi plans to limit its class to those with only large losses and, therefore, to improve its own profit margin: a smaller number of people with a larger loss each.

The concept of a class action is, supposedly, to ensure that all those who suffer can benefit from being part of a single action, that the defendant does not have to fight off dozens, hundreds or thousands of similar actions, and that the over-all costs per plaintiff are balanced by shared work.

That doesn't work if the class is restricted only to those out of whom the firm will make the most money.

Whether a Court accepts a class is a matter for the Court. Faruqi is going to have to satisfy a Court that limiting the class in this way serves the interest of justice, not of the lawyers. Finding someone with locus to argue against it will not be easy: but is is in the interest of the defendants, i.e. Questor, to do so.