Securities Class Action Filings in Canada Plummet; Case Resolutions Reach New Record Height

11 February 2016

Toronto—Securities class action case filings in 2015 plummeted to the lowest levels seen since 2008, according to Trends in Canadian Securities Class Actions: 2015 Update, published by NERA Economic Consulting. Only four cases were filed during 2015, compared to the 13 cases filed in 2014, and 11 in 2013.

Resolutions of Canadian securities class actions in 2015 far outpaced new filings, with seven Canadian securities class actions being settled or tentatively settled, and a record-high six cases dismissed. Defendants in the seven cases settled in 2015 agreed to pay a total of approximately $107 million—an average of $15.3 million, with a median of $11 million. These figures compare to the average settlement of $71.9 million (which is heavily influenced by a small number of very large settlements) and $11.4 median settlement from the period 1997 to 2015.

“2015 was a surprising year for filing and resolution trends for Canadian securities class actions,” said NERA Vice President Bradley A. Heys. “There are several factors that may have contributed to the notable decline in the pace of new filings in 2015. Foremost among these may be the impact of several recent court decisions regarding the evidentiary threshold for the leave requirement under the secondary market civil liability provisions of the provincial securities acts. Other contributing factors may include greater expected litigation costs for class counsel, increased opportunity costs for already busy class counsel firms, and the interplay of these factors with the statutory damage limits.”

Additional Key Trends

  • There are 52 unresolved Canadian securities class actions as of 31 December 2015, representing more than $55 billion in total claims.
  • Each of the four new filings in 2015 involves claims under the secondary market civil liability provisions of the provincial securities acts (“Statutory Secondary Market cases”), compared to 11 such filings in 2014 and 10 in 2013.
  • Over the last six years (2010–2015), a total of 46 class actions have been filed in Canada against TSX-listed companies.
  • There have now been a total of 68 Statutory Secondary Market cases filed since these new provisions came into force in Ontario at the end of 2005.
  • In 2015, three of the four new securities class action cases were filed in Ontario. Historically, approximately 78% of new cases involved a filing in Ontario and 25% in Quebec.
  • Two of the four new cases filed in 2015 also involve parallel class actions filed in the US.
  • Of the 68 Statutory Secondary Market cases filed to date, five (7.4%) have been dismissed as of the end of 2015.

Class Action Trends Series

NERA has been analyzing trends in securities class actions for more than 20 years. In addition to this Canada Trends report, the firm produces annual US and UK Trends studies. This year-end study was authored by NERA Economic Consulting Vice President Bradley A. Heys and Affiliated Consultant Mark L. Berenblut.

Trends in Canadian Securities Class Actions: 2015 Update may be downloaded from:

http://www.nera.com/publications/archive/2016/trends-in-canadian-securities-class-actions--2015-update.html

About NERA

NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For over half a century, NERA's economists have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world's leading law firms and corporations. We bring academic rigor, objectivity, and real world industry experience to bear on issues arising from competition, regulation, public policy, strategy, finance, and litigation.

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