Record Increase in 2016 US Securities Class Action Filings Driven by Merger-Objection Cases
23 1월 2017 - 9:29PM
Business Wire
NERA Economic Consulting Releases Annual
Securities Class Action Trends Report
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
- Section 11 allegations accounted for 20
filings in 2016, which is approximately equal to the average rate
since 2010, but 23% lower than the rate of such filings in
2015.
- Filings continued to be concentrated in
the Second and Ninth Circuits—with 87 case filings in the Ninth
Circuit (a 20% increase) and an all-time high of 72 filings in the
Second Circuit. Third Circuit filings reached 34, up from 21 in
2012. In the Fifth Circuit, 17 class actions were filed, the fewest
in four years.
- The 300 federal securities class action
suits filed in 2016 involved approximately 5.2% of US publicly
traded companies. The average probability of a firm being targeted
by a “standard” securities class action (e.g., Rule 10b-5, Section
11, and/or Section 12) was 3.4% in 2016, only slightly higher than
the average probability of 3.0% between 2000 and 2002.
- 28% of the total securities class
action cases filed in 2016 (85 cases) were brought against firms in
the Health Technology and Services sector, almost double that of
2015. Finance Sector filings made up 16% of total filings.
- In 94% of securities class action filed
in 2000-2016, a motion to dismiss was filed. Only 15% of securities
class actions filed during this period reached a decision on a
motion for class certification.
- 674 securities class actions are
pending in the federal system, a decrease from the high of 717 in
2005.
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 over half
a century, NERA's economists 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 bear on 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. With its main office in New York
City, NERA serves clients from more than 25 offices across North
America, Europe, and Asia Pacific.
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Media:NERA Economic ConsultingBenjamin Seggerson, +1
202-466-9232Senior Managerben.seggerson@nera.com
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