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29 January 2013
Filings of Merger Objection Class Actions Offset Declines in Credit Crisis Litigation and Cases with Chinese Company Defendants
New York -- The number of securities class action cases resolved in 2012 plummeted to record lows according to Recent Trends in Securities Class Action Litigation: 2012 Full-Year Review, a biannual report released today by NERA Economic Consulting.
One hundred and fifty-two cases were dismissed or settled in 2012, compared to the 244 securities class actions resolved in 2011. Only 93 securities class actions were settled in 2012 -- also a record low since 1996 and a 25% reduction over 2011.
Filings of securities class actions only slightly declined in 2012, with a total of 207 class actions filed in federal courts last year, compared to the average rate of 221 over the previous five years. Trends authors also observed a decline in the pace of filings over the course of 2012, with the fewest filings occurring in December.
Sizeable reductions in credit-crisis litigation and cases with a Chinese company as defendant were largely offset by filings of merger objection cases, which accounted for 25% of new filings in 2012. Of the 53 merger objection cases filed in federal court in 2012, 33 cases allege a violation of Section 14 of the Securities Exchange Act, while the remaining 20 allege breach of fiduciary duty, but no violation of federal securities law.
Filings of “standard” securities class actions, those involving alleged violations of Rule 10b-5, Section 11, or Section 12, have declined in recent years compared to the period of 2005-2008. Such filings accounted for 142 cases in 2012, compared to the average of 144 class action cases annually during 2009-2011 and the average of 173 cases from 2005-2008.
“There have been some interesting developments in securities class actions in 2012. A large reduction in the number of cases settled was coupled with an even larger reduction in the number of cases dismissed, yet settlement dollars have increased.” said NERA Senior Consultant and Trends co-author Dr. Renzo Comolli. “Meanwhile, in the last few years, plaintiffs’ attorneys’ fees have been getting compressed. All of this happens against the backdrop of new filings that are changing more in nature than in number.”
Key Findings of Recent Trends in Securities Class Action Litigation: 2012 Full-Year Review
Case Resolutions
Settlement Amounts
Filings
Allegations
Foreign Companies
Circuit
Sector
Time to File
Motions
Plaintiffs’ Attorneys’ Fees and Expenses
NERA Securities Class Action Trends Report Series
NERA has been analyzing trends in securities class actions for more than 20 years. Two reports are published per year: a mid-year study and an annual review at year's end. This year-end study, Recent Trends in Securities Class Action Litigation: 2012 Full-Year Review, is co-authored by Dr. Renzo Comolli, Dr. Ronald I. Miller, Svetlana Starykh, and Sukaina Klein.
For more details and to read the report, visit: www.nera.com/recenttrends.
About NERA
NERA Economic Consulting (www.nera.com) 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.