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Securities class action filings in Australia set a new record in 2009, breaking the previous record set in 2008. A key factor in the recent increase in securities class action filings has been a change in the way securities class action litigation is funded in Australia. Until only a few years ago, there was a strong disincentive to bring an action due to the risk of incurring significant legal costs. The emergence of commercial litigation funding has improved the incentive and ability for investors to participate in class actions. In light of the growing environment for securities class action litigation in Australia, this new study examines for the first time trends in Australian securities class actions. The study finds that the six Australian class action filings in 2009 bring the total for 2007–2009 to 14—exactly half the total number of filings since the first securities class action case was filed in Australia in the early 1990s. Since 2005, the large majority of class actions have been financed by a commercial litigation funder.

According to the study, more than half the securities class actions filed between 1999 and 2009 alleged either misleading or deceptive conduct, or failure by companies to disclose promptly information material to the value of their securities. More than half of all securities class actions were brought against companies in the financial industry (including insurance and real estate). The study also finds that settlement is the most likely outcome of securities class action cases in Australia. Eight of the 12 class actions resolved by the end of 2009 were settled. This trend has become more pronounced in recent years—all of the resolved cases filed after 2003 were settled. Only two Australian securities class action cases have been resolved by final judgment.

Securities Class Action Trends Report Series

NERA has been analyzing trends in securities class actions for more than 15 years, and we continue to study litigation trends around the world. Two reports analyzing US trends are published each year: one at mid-year and a second, annual review published at year end. In 2009, we released our first studies of class action trends in Japan and Canada. This is the first such study on securities class action trends in Australia.