Trends In Canadian Securities Class Actions

Filings for new Canadian securities class actions have been essentially flat over the last three years, according to a recent report by NERA Economic consulting (here). That trend is consistent with the one for the filing of U.S. class actions (here). Last year there were 11 securities class actions filed in Canada, the same as in the prior year and one more than in 2010. The largest number of these cases filed in a single year since 1997 was 15 in 2011.

Since 2006 when the first Bill 198 cases were filed (those based on then newly enacted provisions in Canada) the number of securities class actions filed in Canada has varied from year to year with the overall trend for the period being up. Indeed, since 2006 when only one Bill 198 case was filed, the largest number of filings occurred in the last two years with 10 being brought in each year.

About 36% of the Bill 198 cases filed last year involved cross-boarder claims. Three of the four cross-boarder Bill 198 cases involved shares listed on the TSX and the NYSE. The fourth cross-boarder case involved shares of SouthGobi Recourses which are listed on the TSX and the Hong Kong Stock Exchange. A related case was brought in 2013 involving the parent of SouthGobi whose shares are listed on the TSX and the NYSE. In addition, five other actions were filed in the U.S. involving Canadian domiciled issuers.

Last year six Canadian securities class actions were settled or tentatively settled. That matches the number for the prior year. The average settlement was $6.4 million as was t he median settlement. These values compare to the median settlement of $10.7 million over the period 1997 through 2014. The average for that period was $79.5 million which is skewed by two exceptionally large settlements involving Nortel Networks Corporations.

Five of the settled actions last year were Bill 198 cases. The average settlement in those cases last year was $5.7 million while the mean was $5.9 million. That compares to a median settlement of $7 million and an average of $8.7 million for those cases since 2006. In contrast, since 2006 about half of the settled Bill 198 cases were cross-boarder actions. The average settlement in those actions was $12.8 million while the median was $9.5 million.

Finally, since 1997 the number pending Canadian securities class actions has steadily increased. Presently, there are 60 cases pending. About 38 of these cases are Bill 198 actions.

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