Canadian securities class action filings drop in 2012

According to the report, all of the new filings for 2012 were shareholder class actions. And, unlike previous years, none of the filings involved claims relating to the credit crisis, suits against North American-listed Chinese companies, or allegations of Ponzi schemes. “The abatement of these recent trends in filings was consistent with the experience in the United States during 2012,” it notes.

Eight of the new filings were made under the secondary market civil liability provisions of the provincial securities acts, it reports. Also, six of the nine cases were brought against companies in the resource sector. None of the 2012 cases involved financial firms.

Additionally, NERA notes that six class action filings were made against Canadian-based companies in U.S. courts.

The report says that, with nine new securities class actions filed, and five cases being resolved during the year (three settlements and two dismissals), there were 51 active securities class actions as of Dec. 31, which is nearly double the number of active cases four years ago.

The median settlement for all Canadian securities class action settlements (excluding partial settlements) is $13 million, the firm says.

“Perhaps the most notable development during 2012 was the agreement by Ernst & Young to pay $117 million to settle claims in relation to its role as auditor of the TSX-listed Chinese company Sino-Forest. Although this represents only a partial settlement of that case (claims against other defendants are still pending), and is still subject to court approval, it is the largest total settlement in any [secondary civil market liability] case to date,” it adds.

Looking ahead, NERA says it “seems reasonable to expect to see these cases generally move at a more rapid pace”; and, more cases, and a more rapid pace, may also mean more settlements in 2013, it says.