Canadian Securities Class Action Filings Dip in 2012, According to NERA Economic Consulting Report

14 February 2013

Toronto -- Filings of securities class actions in Canada declined to nine new cases during 2012 from the record 15 new filings in 2011, and lower than the average of 12 cases per year since 2008, according to NERA Economic Consulting's report released today, Trends in Canadian Securities Class Actions: 2012 Update.

All of the new filings for 2012 were shareholder class actions, and in contrast to previous years' filings, none involved allegations of Ponzi schemes, claims relating to the credit crisis, or claims against North American-listed Chinese companies. The abatement of these recent trends in filings was consistent with the experience in the US during 2012. However, none of the nine cases filed in Canada appear to be related to the surge in merger objection cases seen in the US over the last three years.

Case Resolutions

Three securities class actions were settled in 2012 (excluding partial settlements)-two Bill 198 cases (Article Glacier for $13.8 million and Gammon Gold for $13.25 million) and one Ponzi scheme case (RBC settled claims relating to the Earl Jones Ponzi scheme for $17 million). The median settlement for all Canadian securities class action settlements (excluding partial settlements) in NERA’s database is $13 million.

Notably in 2012, Ernst & Young agreed to pay $117 million to settle claims relating to its role as auditor of Chinese company Sino-Forest. This partial settlement, if approved, would represent the largest settlement in a Bill 198 case to date.
Active Cases

With nine new securities class actions filed and the resolution of five cases during 2012, there were 51 active Canadian securities class actions as of 31 December. This is nearly double the number of active cases four years ago. NERA's database now includes data for 100 Canadian securities class actions filed since 1997.
"The growing number of active cases on the docket and the recent court rulings suggest that we may see both more cases move to the leave application and certification stages and possibly more settlements in 2013 than we saw in 2012," said NERA Vice President Bradley Heys, co-author of the report.

Canadian Securities Class Actions: Key Trends

  • Eight of the nine cases filed in 2012 involved issuers with securities listed on the TSX.
  • Bill 198 cases made up the majority of filings in 2012, accounting for eight of the nine cases filed-in line with previous years.
  • All of the cases filed in 2012 were filed in Ontario. Two cases (SNC-Lavalin and Agnico-Eagle) were also filed in Québec. The claims against Facebook and GLG Life Tech Corp were also filed in British Columbia.
  • Six of the nine new class actions in 2012 also had parallel US filings: Angico-Eagle, BP p.l.c., Facebook, GLG Life Tech, Kinross Gold, and Nevsun Resources.
  • Two-thirds of the new cases filed in 2012 were brought against companies in the mining or oil and gas sectors.
  • Continuing a the trend toward faster filing, the median time to file from the end of the proposed class period to the date of filing for cases filed in 2012 was approximately 3.1 months, and the average was 4.6 months.
  • Two cases were dismissed during 2012-cases brought against Western Coal and CIBC.
    55% of the 51 active cases are Bill 198 cases, representing more than $19 billion in claimed damages.
  • US securities class actions filings were made against six Canadian-domiciled companies in 2012, bringing the total number of active US cases against Canadian-domiciled companies to 17.

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 two US Trends studies annually, as well as reports for the UK, Australia, Japan, and Italy. This year-end study was authored by NERA Economic Consulting Senior Vice President Mark L. Berenblut and Vice President Bradley A. Heys.

Trends in Canadian Securities Class Actions: 2012 Update may be downloaded from:

About NERA

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