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23 January 2017
New York—Three hundred securities class actions were filed in US federal courts in 2016, a 32% increase over 2015 and the highest number of filings of any year since the aftermath of the 2000 dot-com crash, according to “Recent Trends in Securities Class Action Litigation: 2016 Full-Year Review,” an annual report released by NERA Economic Consulting.
“The record number of securities class action cases in 2016 was largely driven by merger-objection cases, with 88 such filings,” said NERA Managing Director Dr. David Tabak. “Federal merger-objection cases, which allege a breach of fiduciary duty by directors and officers, grew at the fastest rate since 2010. However, this recent growth is more likely due to state court decisions limiting ‘disclosure only’ settlements, rather than due to increased M&A activity. Plaintiffs have begun to shift merger-objection cases to venues outside of Delaware, though the full extent of this trend remains to be seen.”
A total of 113 securities class actions settled in 2016, the highest number observed since 2011, and a near-record 149 cases were dismissed. For the first time since the passage of the Private Securities Litigation Reform Act (PSLRA), more cases were dismissed than settled.
The average settlement amount increased substantially for the second straight year, reaching $72 million in 2016, up by more than 35% compared to the 2015 figure. However, excluding outlier cases that settled for more than $1 billion, the average settlement amount decreased to $43 million from $53 million in 2015. The 2016 median settlement amount, which is more robust to the effects of outliers, increased by more than a fifth from the 2015 median amount of $7.4 million to $9.1 million.
Additional Key Trends
NERA Securities Class Action Trends Report Series
NERA has been analyzing trends in securities class actions for more than 25 years. This year-end study, Recent Trends in Securities Class Action Litigation: 2016 Full-Year Review, is co-authored by NERA Senior Consultants Stefan Boettrich and Svetlana Starykh, with contributions from Dr. David Tabak. In addition to NERA’s US report, the firm produces annual reports on securities class action litigation in Canada and on UK regulatory enforcement actions.
To download the report, visit: http://www.nera.com/publications/archive/2017/recent-trends-in-securities-class-action-litigation--2016-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.