Securities class action case filings in 2015 plummeted to the lowest levels seen since 2008, with only four cases filed, according to a report published on Thursday by New York City-based NERA Economic Consulting.
The handful of filings last year represents a steep drop from the 13 cases that were filed in 2014, and the 11 cases that were brought in 2013, according to NERA data. The report attributes the falloff to several factors, from recent court decisions to the costs of bringing these sorts of claims.
"There are several factors that may have contributed to the notable decline in the pace of new filings in 2015," says Bradley Heys, NERA vice president, in a statement.
"Foremost among these may be the impact of several recent court decisions regarding the evidentiary threshold for the leave requirement under the secondary market civil liability provisions of the provincial securities acts. Other contributing factors may include greater expected litigation costs for class counsel, increased opportunity costs for already busy class counsel firms, and the interplay of these factors with the statutory damage limits," Heys explains.
All four of the new filings in 2015 involve claims under the secondary market civil liability provisions of the provincial securities acts, the NERA report says. Three of the four new cases were filed in Ontario, the report notes, and two of the four also involve parallel class actions filed in the U.S.
While the number of new filings was down sharply in 2015, seven class actions were settled, or tentatively settled, during the year, and six cases were dismissed, the NERA report says.
The seven cases that were settled in 2015 resulted in approximately $107 million in total payouts, according to the report, which notes that this works out to an average settlement of $15.3 million, and a median amount of $11 million.
From 1997 to 2015, the average settlement for a Canadian class action was $71.9 million, the NERA report says. However, this is "heavily influenced by a small number of very large settlements", the report says. Indeed, the median settlement was $11.4 million for that period, the report adds says.
There were 52 unresolved Canadian securities class actions as of Dec. 31, 2015, the NERA report says, which represents more than $55 billion in total claims.