NERA Releases Canadian Securities Class Action Trends Report

26 January 2009

26 January 2008/Toronto -- NERA Economic Consulting, a leading global provider of economic advice and analysis in business, legal, and regulatory matters, has released a first-of-its-kind report analyzing securities class actions in Canada: Trends in Canadian Securities Class Actions: 1997-2008, Canada Strikes its Own Course.

According to NERA's report, a record nine securities class actions were filed in 2008, an 80% increase over the previous maximum annual filings and a 125% increase over 2007 filings. This increase in filings may reflect recent legislative changes to the provincial Securities Acts. Between 2005 and 2008, four provinces (Ontario, Alberta, Québec, and British Columbia) have introduced civil liability for continuous disclosure and a right of action for investors harmed by misrepresentations or failures to make timely disclosure. These amendments to the provinces' Securities Acts have opened the door to securities class actions.

While these filing numbers are miniscule in comparison to similar filings in the US, even controlling for the smaller size of Canada's financial markets, this "rise in securities class action filings is an indication that plaintiffs' counsel are prepared to test the new provisions of the legislation," says NERA Senior Vice President and co-author Mark Berenblut.

Credit Crisis and Options Backdating Class Actions are Introduced to Canada
2008 witnessed the first Canadian securities class action filings related to the global credit crisis, which has resulted in a wave of US litigation. Stock prices around the globe have been affected by the exposure of public companies to subprime mortgages. The CIBC case, the first Canadian case to reflect the global impact of stock price volatility connected to companies exposed to mortgage-related securities, involves allegations relating to CIBC’s exposure to subprime mortgage loans.

2008 also saw the first class actions involving options backdating allegations in Canada, some two years behind the peak in options-related filings in the US. Nevertheless, NERA’s report notes, plaintiffs' counsel have identified and threatened to bring actions against as many as 50 TSX-listed companies suspected of having manipulated stock options between 1987 and 2005. This suggests that options manipulation cases may become a larger component of Canadian class action filings in the future.

Settlement Trends
Since class action legislation was first enacted in Canada, 20 securities class action cases have been settled. Unsurprisingly, settlements in cases involving actions brought in both US and Canadian courts tend to be larger than settlements in cases brought only in Canada. The average settlement for cross-border cases is $322 million, whereas the average settlement for Canadian domestic shareholder class actions is $73 million.

Trends in Canadian Securities Class Actions: 1997-2008, Canada Strikes its Own Course also includes analyses of trends in filings and allegations and trends in resolutions (verdicts and settlements), and offers detailed data on pending shareholder class actions.

Securities Class Action Trends Report Series
NERA has been analyzing trends in securities class actions for more than 15 years and, in addition to this Canadian Trends report, produces two studies on the topic annually in the US. This report was authored by NERA Senior Vice President Mark Berenblut, Vice President Bradley Heys, and Consultant Svetlana Starykh.

For more details, and to read the full report, visit

About NERA

NERA Economic Consulting ( is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For more than six decades, we 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 issues arising from competition, regulation, public policy, strategy, finance, and litigation.

NERA’s clients value our ability to apply and communicate state-of-the-art approaches clearly and convincingly, our commitment to deliver unbiased findings, and our reputation for quality and independence. Our clients rely on the integrity and skills of our unparalleled team of economists and other experts backed by the resources and reliability of one of the world’s largest economic consultancies. Continuing our legacy as the first international economic consultancy, NERA serves clients from major cities across North America, Europe, and Asia Pacific.