Trends in Canadian Securities Class Actions: 2014 Update; The Docket Continues to Grow as New Filings Outpace Settlements

Tue Feb 10 12:05:00 EST 2015
By Bradley A. Heys, Jacob Dwhytie, and Mark L. Berenblut

Canadian securities class actions continued to be filed at a steady pace in 2014, according to this newly released edition of NERA's ongoing study, Trends in Canadian Securities Class Actions. Eleven new securities class actions were filed during 2014, equaling the number of new cases filed in 2013. NERA’s proprietary database now includes a total of 123 Canadian securities class actions filed over the 18-year period of 1997 through 2014.

The study's co-authors, Vice President Bradley A. Heys, Consultant Jacob Dwhytie, and Affiliated Consultant Mark L. Berenblut, report that the number of outstanding securities class action cases continued to grow in 2014 as the 11 new cases more than offset the seven cases which were resolved (or tentatively resolved) during the year. Of the seven resolved cases, six were settled and one was dismissed. As of 31 December 2014, there were a total of 60 unresolved securities class actions representing more than $35 billion in total claims.

The authors note that each of the 11 new cases filed is a shareholder class action, continuing the trend of 2012 and 2013. Seven of these cases in 2014 involve securities listed on the Toronto Stock Exchange (TSX) and three issuers with securities listed on the TSX Venture Exchange (TSX-V). In total, 46 class actions have been filed against TSX-listed companies over the 2009 to 2014 period. This represents 3 percent of the average number of companies listed over that period, for an average annual litigation risk of 0.5 percent.

The authors also report that ten of the 11 new filings in 2014 involved claims under the secondary market civil liability provisions of the provincial securities acts ("Statutory Secondary Market" cases, previously referred to as "Bill 198" cases). These 10 new Statutory Secondary Market cases are equal in number to the cases filed in 2013. In total, 63 Statutory Secondary Market cases have been filed since the statutory amendments first started coming into force at the end of 2005. Of these, 38 cases (60 percent), representing more than $32 billion in total claims, remain unresolved at the end of 2014. 22 Statutory Secondary Market cases (35 percent) have settled, and three (5 percent) have been dismissed. Including the partial settlements in the class action involving Sino-Forest, defendants in these cases have collectively agreed to pay more than $345 million to resolve these claims.