Class actions show no sign of abatement, say reports

ISS and Cornerstone Research have released findings based on 2017 data

New surveys from Cornerstone Research and ISS show that class action lawsuits exploded again last year. As the ISS survey notes: “While the volume of settlements greater than $100m was low, new cases filed in 2017 were significantly higher than the previous year.” Cornerstone research noted that more securities class action lawsuits were filed in 2017 than in any previous year since the Private Securities Litigation Reform Act of 1995. While this number was driven by M&A suits, which doubled in 2017, other cases increased for the fifth year running, by 15% over 2016. About one in 15 S&P 500 companies were sued in 2017. More European issuers were targeted in 2017 than in any previous year as well, increasing 50% over 2016. While filing activity slowed in the second half of the year, a new phenomenon emerged – cases involving cryptocurrencies. In addition, the trend towards more individual lead plaintiffs than institutional investors, continued. The ISS survey focuses on the largest settlements, noting that its Securities Class Action Services (SCAS) recorded 162 approved securities class action settlements in 2017, though only two were included in SCAS’ Top 100, the largest cases since the 1995 Act.These were at BP for a $175m settlement, and Salix Pharmaceuticals, the largest settlement approved for 2017, of $210m. Jeff Lubitz, Executive Director of SCAS, said that the Petrobras settlement announced in early January 2018, and therefore not included in the survey, of $2.95bn will be the “fifth largest US securities class action settlement of all-time… behind Enron, WorldCom, Cendant, and Tyco, and it does not even include the case in Brazil”. The Allergan, also in January this year, will make the top 100 as well, at $290m. As with Cornerstone, Lubitz notes activity outside of North America, QBE Insurance Group Limited in Australia, an A$132.5m tentative settlement and Tesco in the UK, with a potential £85m settlement. The number of antitrust class actions has also grown in recent years, said Lubitz, with many of these focused on LIBOR cases. “$3.3bn is available from five cases with claim deadline dates within the next six months,” he added.