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2015 sees 5-year high in securities class action settlements.

Summary: Eight securities class action settlements were approved in 2015, according to Cornerstone Research’s latest report, “Securities Class Action Settlements--2015 Review and Analysis.” This is the ...

Eight securities class action settlements were approved in 2015, according to Cornerstone Research's latest report, "Securities Class Action Settlements--2015 Review and Analysis." This is the highest number since 2010.

Total settlement amounts rose to more than $3 billion, which was up 184 percent compared to the historic low seen in 2014 and was 9 percent higher than the average for the prior five years.

Eight of them were "mega settlements," as Cornerstone labeled them, which means they were greater than $100 million. In 2014, there was only one case of this size. Cornerstone believes the increase correlated with the very high "estimated damages" in these cases. The median estimated damages for mega settlements in 2015 was the second highest in the last 10 years.

"The surge in securities class action settlements in 2015 can be attributed in part to three consecutive year-over-year increases in the number of case filings," said Laura Simmons, co-author of the report and senior advisor for Cornerstone Research. "The increases in case filings may suggest that higher numbers of settlements will persist in the near future. While settlement volume fluctuates from year to year, the size of the typical settlement tends to remain fairly consistent."

The average settlement size rose to $37.9 million in 2015, up from $17 million in 2014, while the median settlement range saw little change--$6.1 million in 2015 compared to $6 million the prior year.

The report also found that in 2015, 35 percent of accounting-related cases named an auditor defendant, which was a 50 percent increase over the prior 10-year average, according to Cornerstone. Meanwhile, underwriter defendants were named in 76 percent of cases with Section 11 claims.

Consistent with previous years, most settlements for securities class actions took place in the Second and Ninth Circuits.

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Publication:Inside Counsel
Date:Mar 31, 2016
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