The backlog of U.S. securities class actions is growing, as the number of settlements and dismissals drops to record lows, according to the latest data from NERA Economic Consulting.
In a new report, the firm predicts that by the end of the year 213 securities class actions will have been filed in 2012; but only 152 cases are expected to have been resolved in the same period. Specifically, it notes that the number of settlements in 2012 is expected to plummet to 92, which is 31 fewer than last year and the lowest number since 1996. And, the number of cases that are dismissed is expected to drop in half to just 60, which is 63 fewer than last year and the lowest number since 1998.
As a result, the number of securities class actions awaiting resolution is expected to increase to 596 by the end of the year, it says. This increase in the number of pending cases is bucking a decreasing trend that started in 2004, it adds.
“There are likely multiple causes for the record decline in the number of cases dismissed or settled in 2012,” said NERA senior consultant Dr. Renzo Comolli. “The slow decumulation in the number of cases awaiting resolution, which had been ongoing for years, had left fewer cases to be settled or dismissed this year. That is unlikely to be the whole story, though, because this year’s drop in settlements and dismissals is larger than the previous, recent reduction in the number of pending cases.”
“The data suggest that changes in the legal environment are causing a slowdown in the resolution of cases; one possible contributing factor is that some resolutions may have been delayed while the Supreme Court considers the Amgen case. Whether the slowdown in resolutions is going to be short-lived or long-lived is one of the interesting questions for 2013,” Comolli adds.
NERA also reports that, while the number of settlements has declined in 2012, median settlement values reached record highs this year of US$11.1 million, marking only the second time since 1996 that the median settlement value has exceeded US$10 million.