Aggregate Damages Analysis in Relation to the IPO of a Cross-Listed Company

The Situation

A securities class action was filed against a Canadian company that designs, develops, and sells interactive technology products. The company completed an IPO and was trading on both NASDAQ and the Toronto stock exchange. The lawsuit in the US alleged claims under Section 11 and Section 12 of the US Securities Act of 1933. The parallel lawsuit in Canada alleged claims under the Ontario Securities Act. Both lawsuits alleged defects with the company’s prospectus and registration statement.

NERA's Role

Dr. Jordan Milev was called upon to assist counsel for the defendants. NERA analyzed the company’s stock price movement following the IPO, both on NASDAQ and on the Toronto stock exchange, and prepared an analysis of aggregate exposure, assuming that the plaintiffs could prove the assertions in their complaint. NERA also examined company equity analyst reports, trade press articles, and technology market publications to assist counsel with developing arguments concerning negative causation. In addition, NERA prepared a predicted settlement estimate.

The Result

The plaintiffs agreed to settle the case for an amount close to NERA’s predicted settlement estimate.