Recent Trends in Securities Class Action Litigation: 2013 Full-Year Review
More securities class actions were filed in US federal courts in 2013 compared to 2012, but the increase has been a small one, according to the latest edition of NERA's annual study. Co-authored by Senior Consultants Dr. Renzo Comolli and Svetlana Starykh, Recent Trends in Securities Class Action Litigation: 2013 Full-Year Review draws from more than 20 years of NERA research on case filings and settlements in US securities class actions.
Legal developments dominated the news about federal securities class actions in 2013. Last February, the Supreme Court decision in Amgen resolved certain questions about materiality but focused the debate on Basic and the presumption of reliance, which are now back to the Supreme Court after certiorari was granted for the second time in Halliburton.
Against this legal backdrop, 2013 saw a small increase in the number of complaints filed for securities class actions in general and for class actions alleging violation of Rule 10b-5 in particular. The authors find that, in 2013, 234 securities class actions were filed, compared to 213 class actions filed in 2012, representing a 10% increase and a slight increase compared to the 224 average number of filings in the period of 2008 to 2012. Filings of securities class actions involving alleged violations of Rule 10b-5, Section 11, or Section 12 saw a 15% increase over 2012, thereby exceeding the filings in any year in the 2009 to 2012 period. Filings in the 5th Circuit alleging violation of Rule 10b-5 more than doubled in 2013 to 13, compared to six filings in 2012 and five in 2011.
Settlement activity continued to proceed at a very slow pace after the 2012 record low. Only 100 securities class actions were settled in 2013, compared to 94 settlements reached in 2012 and the 127 average settlements per year in the period of 1996 to 2011. Average settlement amounts for "usual" securities class actions (i.e., excluding settlements over $1 billion, merge objection settlements, and IPO laddering settlements) in 2013 broke prior records, reaching $55 million, an increase of 53% over 2012 and a 31% increase over the previous high in 2009. The median settlement amount for 2013 was $9.1 million, a 26% decrease compared to 2012.