Securities Class Action Filings Decline But Settlement Values Increase

The number of securities class actions filed this past year declined slightly while the number of pending cases increased and the median settlement value was among the highest in years, according to a recent report published by NERA Economic Consulting. The Flash Update: 2012 Trends in Securities Class Actions (here) is based on statistics collected to date and projections through the end of the year.

Number of cases: NERA projects that 213 securities class actions will be filed by year end. This is based on 195 cases actually having been filed to date and a projection that 18 additional actions will be brought by year end. This is down slightly from the 225 cases filed in 2011 and the 232 actions brought in 2010. At the same time, it is only slightly below the average number of filings since 2007 which is 221 filings.

Settlements: The number of settlements in 2012 is down dramatically compared to recent years, according to NERA. The firm projects that only 152 actions will be settled this year. That compares with 246 in 2012, 255 in 2010 and 227 in 2009. It is also far below the average of 234 cases settled over the last five years.

Pending cases: In contrast, NERA projects that there will be 596 pending securities class actions by year end. That number exceeds the 541 and 570 pending at the end of, respectively, 2011 and 2010. It is, however, slightly below the 592 actions that were pending at the end of 2009 but above the 577 average of the prior five years.

Average settlement value: The average settlement value for 2012 will significantly exceed that of 2011 and 2009 but is far below that of 2010. NERA projects that for 2012 the average settlement value will be $38 million compared to $23 million in 2011, $92 million in 2010 and $12 million in 2009. While the average settlement value for 2012 is below the average of the last five years, which is $81.4 million, when the outlier year of 2010 is eliminated the value for 2012 exceeds the average for the prior five years which is about $31 million.

Median settlement value: Finally, the Flash Report notes that the median settlement value for 2012 will be $11.1 million. This is the highest in years, according to NERA. In 2011 the median was only $7.5 million while in 2010 it was $11 million and $9 million in 2009.

Overall the Report paints a picture of slightly fewer cases being filed but more actions pending in the courts. The settlement values of securities class actions also appear to be increasing compared to recent years.

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