The number of securities class actions in Canada is at an all-time high, according to a new report from National Economic Research Associates Inc.

The firm reports that outstanding securities class actions reached a new record level in Canada in 2010, with 28 active cases underway at the end of the year, representing approximately $15.9 billion in outstanding claims.

During the year, eight new class actions were filed, representing claims of more than $870 million. This was down from nine cases in 2009 and 10 filings in 2008.

None of these new filings appear to be directly related to the financial crisis, the firm observes. So far, only three Canadian class actions appear to be directly related to the crisis, two of which were filed in 2008, and one in 2009.

In the United States, by contrast there have been 230 credit crisis-related cases, NERA says, including 31 new cases in 2010. “The pace of such filings south of the border is declining (103 cases were filed in 2008 and 57 cases in 2009), so it is unclear whether we will see any new cases relating to the credit crisis in Canada in the future,” NERA says.

NERA reports that five Canadian cases were settled in 2010 for payments by defendants of $67.6 million. The average settlement for these cases was $13.5 million, and the median settlement was $10 million, up from average and median settlements of $9 million in 2009. No cases were dismissed during the year.

The report tallies 25 cases that have now been brought under the recently introduced secondary market civil liability provisions. Of these, nine cases have been settled and 16 are still active. The average settlement defendants have paid is $10.7 million, it says. Seven of the eight new class actions filed in 2010 include claims under these provisions.

NERA also reports that there are 13 active U.S. securities class actions against Canadian-based companies, three of which also have parallel Canadian class actions.

Between 1996 and 2010, Canadian companies were named as defendants in 71 class action filings in the U.S., NERA says, adding that these risks may be somewhat reduced in light of a recent U.S. Supreme Court decision which places limits on U.S. private securities litigation relating to trading of securities outside the U.S.

In addition to the impact of that decision, NERA suggests that there are several factors that may affect trends in this type of litigation in the year ahead, including: increasing competition among class action counsel, and any problems that Canadian companies might have in moving from Canadian GAAP to the International Financial Reporting Standards in preparing their financial statements.

IE