Securities Settlements Drop, But Average Payout Rises

Securities class actions filed in the first half of 2012 kept up their historical clip to hit 232 by the end of the year, but the average number of settlements fell while settlement payouts rose, according to the latest NERA economic report.

The average settlement amount for the first half of 2012 was $41 million – when you exclude the mega $1 billion deal for In Re American International Group, Inc. litigation.  The $41 million figure is a substantial jump from last year’s $31 million, according to NERA Economic Consulting in its July 24 report.

Settlements were at their lowest level since 1999, with 49 cases settled so far.  If this pace continues NERA predicts 98 settlements by New Year’s.  That is a sharp drop from 128 settlements in 2010 and 123 in 2011.

Lawyers also are drawn to the West’s 9th Circuit courts and the East coast’s 2nd Circuit where filings are concentrated.  But the trend seems to be tipping toward New York.  They had more cases filed in the first six months of 2012 while the West’s 9th Circuit-based courts saw a substantial decrease.

For the first half of the year courts received 116 class actions and NERA projects it will hit 232 cases by the end of the year.  That compares to 224 filed in 2011 and an overall average of 217 a year between 1996 and 2011.

The type of case filed is moving away from Chinese domiciled companies that lead the cases filed in 2011.  Since January there have only been 10 complaints filed against Chinese firms.  It is the merger objection cases that now dominate and they continue to be a major part of total filings, a trend that has continued since 2010.

NERA economists analyze trends in securities class actions, creating expert testimony and policy recommendations for government, law firms and corporations in the areas of public strategy, competition, regulation and litigation.



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