American Flag

NERA Economic Consulting Releases Annual Securities Class Action Trends Report

20 January 2015

20 January 2015/New York— Securities class action settlement amounts plummeted in 2014, according to NERA Economic Consulting’s annual report, Recent Trends in Securities Class Action Litigation: 2014 Full-Year Review, released today. Settlement amounts declined 38 to 61 percent in 2014, based on analysis of the cases included in NERA’s calculations. The median settlement amount in 2014 was $6.5 million, the lowest in 10 years.

The decrease in settlement amounts was more marked after the much-anticipated Supreme Court decision in Halliburton v Erica P. John Fund, compared to the first part of 2014. On the other hand, filings of new securities class actions of the type addressed by the Court increased 14 percent after the decision was issued, compared to the time in which the decision was pending.

More generally, 168 securities class actions involving alleged violations of Rule 10b-5, Section 11, or Section 12 were filed in 2014, an 11 percent increase over 2013 and a 30 percent increase over 2010.

Now, a Section 11 case is pending before the Supreme Court: Omnicare v Laborers District Council. (Section 11 cases are frequently used by the plaintiff bar to target IPOs.) The Supreme Court’s decision, expected in the first half of 2015, could tighten or loosen the pleading standards for these types of cases. NERA’s report shows that in recent years 73 percent of Section 11 cases have been brought in Circuits that currently require the tighter standard.

“In 2014, securities class actions settled for less compared to recent experience,” said Dr. Renzo Comolli, NERA Senior Consultant and co-author of the report. “But now the Supreme Court in Omnicare is pondering whether to tighten or loosen pleading standards for cases that often center on IPOs. The Supreme Court decision, expected to come on the heels of the largest IPO wave since the dot-com era, could make for an interesting 2015.”

NERA Securities Class Action Trends Report Series

NERA has been analyzing trends in securities class actions for more than 20 years. This year-end study, Recent Trends in Securities Class Action Litigation: 2014 Full-Year Review [link], is co-authored by NERA Senior Consultants Dr. Renzo Comolli and Svetlana Starykh. In addition to the trends discussed above, the 2014 edition offers an in-depth review of: number of filings by circuit, and by sector; new measures of “time to resolve;” analysis of motions for class certification and post-Halliburton II district court decisions on such motions; dismissal rates; attorneys' fees; and other characteristics of securities class actions.

For more details and to read the report, visit: http://www.nera.com/publications/archive/2015/recent-trends-in-securities-class-action-litigation--2014-full-y.html

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.