Securities Class Action Settlement Dollars Increase 46 Percent in 2013
According to Cornerstone Research Report
Larger Settlements Capture Major Share While Median Drops
WASHINGTON, D.C., March 27, 2014 (GLOBE NEWSWIRE) -- via PRWEB - Total
settlement dollars from securities class actions rose by 46 percent in 2013,
according to Securities Class Action Settlements--2013 Review and Analysis, a
new report issued today by Cornerstone Research. The 67 settlements in 2013,
up from 57 in 2012, marked the first year-over-year increase since 2009.
Six mega settlements (defined as those at or above $100 million) pushed
settlement dollars up in 2013, accounting for 84 percent of total settlement
dollars--the second highest proportion in the last decade.
"In 2013, total settlement dollars, at $4.8 billion, reached the highest level
since 2007, driven by both the increase in the number of settlements overall,
as well as the increase in extremely large settlements," said report coauthor
Laura Simmons, a senior advisor in Cornerstone Research's Washington, DC,
office. "The largest settlements in 2013 were associated either with
pharmaceutical firms or financial institutions involved with subprime credit
In contrast, median "estimated damages," a key measure of investor losses,
declined 48 percent from 2012. Since "estimated damages" are the most
important factor in determining settlement amounts, this decline was likely a
major factor contributing to the substantially lower median settlement amount
of $6.5 million in 2013.
The report also notes that the landscape for securities class actions and
their settlements may shift dramatically depending on the outcome of
Halliburton Co. v. Erica P. John Fund, currently pending in the U.S. Supreme
"If the ruling in Halliburton severely limits investors' ability to get
large-scale class actions certified, the future of such cases is up in the
air," said Joseph Grundfest, director of the Stanford Law School Securities
Class Action Clearinghouse. "This past year's data also represent the fading
echoes of the financial crisis, as some of the largest settlements resolve
claims of fraud surrounding transactions in mortgage-backed securities. These
lawsuits won't be around in the coming years to drive aggregate settlement
*Total settlement dollars in 2013 were 60 percent above the average for the
prior five years.
*The proportion of settled cases in 2013 involving accounting allegations
dipped to a ten-year low, but the settlement as a percentage of "estimated
damages" for these cases was much higher than for cases not involving such
*The median settlement in 2013 for cases with a public pension as a lead
plaintiff was $23 million, compared with $3 million for cases without a
public pension as a lead plaintiff.
*Cases reaching more advanced stages of litigation were associated with
median "estimated damages" of more than three and a half times the median
for cases settling in an early stage.
*Settlements of $50 million or lower were far less likely to involve
accompanying SEC actions or public pensions as lead plaintiffs.
*In 2013, 32 percent of settlements less than $10 million were for cases
involving Chinese reverse mergers.
About the Authors
Laarni T. Bulan and Ellen M. Ryan are managers in Cornerstone Research's
Boston office. Laura E. Simmons is a senior advisor in Cornerstone Research's
Washington, DC, office.
About Cornerstone Research
For more than twenty-five years, Cornerstone Research staff have provided
economic and financial analysis of complex issues arising in commercial
litigation and regulatory proceedings. The firm has four hundred fifty staff
who work with a broad network of testifying experts to bring specialized
knowledge and experience to each assignment.
Twitter at @Cornerstone_Res
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CONTACT: Cornerstone Research
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