Securities class action settlement amounts increased in 2012

Despite drop in overall settlements, settlement amounts were up last year

Even though the number of securities class action settlements decreased in 2012, the settlement amounts were larger than they were in 2011.

According to a new report from Cornerstone Research, last year’s 53 court-approved securities class action settlements were the lowest amount of such settlements in 14 years. Despite that, total settlement amounts increased by more than 100 percent in 2012 compared with 2011, with the number of settlements amounting to more than $100 million accounting for nearly three-quarters of all settlement dollars.

One-third of last year’s securities class action settlements pertained to the financial services industry; the technology and pharmaceutical industries were the next sectors with the most settlement dollars.

Prof. Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse in cooperation with Cornerstone Research, said in a press release that “a large portion of recent settlement dollars was from filings associated with some of the largest declines in market capitalization during the past 10 years, and we may continue to see settlement totals influenced by a small group of similar cases.”

The average settlement amount jumped from $21.6 million in 2011 to $54.7 million in 2012. Additionally, average estimated damages—the most important factor in determining settlement amounts—for 2012 reached a six-year high. This was likely due to the large number of big cases related to the credit crisis.

As for predictions into the future, experts don’t anticipate the dip in overall securities class action settlements to be a continuing trend. “Based on the volume of recent securities class action filings, the unusually low number of settlements reported in 2012 is unlikely to persist in the future,” Dr. Laura E. Simmons, senior advisor at Cornerstone Research, said in a press release.

Read the complete report here.

Be sure to read more about trends in securities class actions in the April issue of InsideCounsel.

For more recent coverage of securities class actions, read:

Supreme Court’s Amgen decision makes it easier for shareholders to bring class actions

Securities class action firms earned $653 million in fees in 2012

Securities class action filings drop sharply

Opt-outs: A growing trend in securities litigation

Ashley Post

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