Recent Trends in Securities Class Action Litigation: Q1 2018 Update

Wed Apr 25 11:35:00 EDT 2018
By Stefan Boettrich and Svetlana Starykh

NERA Senior Consultants Stefan Boettrich and Svetlana Starykh published a guest post on the Harvard Law School Forum on Corporate Governance and Financial Regulation reviewing their 2017 full-year review of securities class action litigation and adding their observations of activity in Q1 of 2018. The original report, Recent Trends in Securities Class Action Litigation: 2017 Full-Year Review, was the 25th edition of this annual NERA study. The authors found that securities class action filings had again increased, a surge led by a doubling of merger-objection filings.

New observations by the authors on Q1 2018 include:

  • A total of 123 securities class actions were filed in the first quarter of 2018, including 61 merger objection filings and 57 standard cases.
  • While Q1 2017 was a record quarter for standard filings, Q1 2018 standard filings fall in line with the long-term average.
  • Overall, dismissals outpaced settlements nearly three-to-one, mostly due to resolutions of merger-objection cases.
  • In non-merger-objection cases, more than twice as many suits were dismissed than settled, with an average settlement of $11 million and a median of $7 million.
  • News of two major settlements monopolized the first quarter: the tentative $2.95 billion settlement Petróleo Brasileiro S.A.—Petrobras, which is greater than all last year’s settlements combined, and the tentative $290 million settlement of litigation against Allergan Inc., which is close to 40% higher than last year’s highest settlement.
  • Federal filings claiming Section 11 violations fell 50% year-over-year. This could be due to the US Supreme Court’s 20 March ruling in Cyan, Inc. v. Beaver County Employees Retirement Fund that state courts, including those in historically plaintiff-friendly California, have jurisdiction over class actions with claims under the Securities Act of 1933.

Additional slides pertaining to the first quarter of 2018 are available here

Recent court citations of NERA’s Recent Trends publications:

  • US Supreme Court in California Public Employees’ Retirement System v. ANZ Securities, Inc., 582 U. S. ____ (2017).
  • Beaver County Employees’ Retirement Fund v. Tile Shop Holdings, Inc. No. 0: 14-cv-00786-ADM-TNL (D. Minn. June 14, 2017).
  • In Re Ocean Power Technologies, Inc. Securities Litigation, Civil Action No. 3: 14-CV-3799 (D.N.J. Nov. 15, 2016).
  • New York State Teachers’ Retirement System v. General Motors Company, Civil Case No. 14-11191 (E.D. Mich. May 19, 2016).
  • Phillips v. Triad Guaranty Inc., No. 1: 09CV71 (M.D.N.C. May 9, 2016).
  • Medoff v. CVS Caremark Corp., Civil No. 09-cv-554-JNL (D.R.I. Feb. 17, 2016).
  • Destefano v. Zynga, Inc., No. 12-cv-04007-JSC (N.D. Cal. Feb. 11, 2016).
  • In Re Viropharma Inc. Securities Litigation, Civil Action No. 12-2714 (E.D. Pa. Jan. 25, 2016).
  • In Re Vivendi Universal, S.A. Securities Litig., 123 F. Supp. 3d 424 (S.D.N.Y. Aug. 11, 2015).
  • In Re Indymac Mortgage-Backed Securities Lit., 94 F. Supp. 3d 517 (S.D.N.Y. Mar. 24, 2015).

The full article is availabe on the Harvard Law School Forum on Corporate Governance and Financial Regulation blog here.