Although the number of securities class action suits filed in Canada held up in 2009, the value of settlements was down notably from the previous year.

According to a report form NERA Economic Consulting, eight class actions were filed in 2009, down slightly from 10 filings in 2008.

However, the settlement values for securities class actions in 2009 were significantly lower than in 2008, with six cases settling in 2009 for approximately $51 million, down from the eight cases that settled for approximately $890 million in 2008. The average settlement for 2009 was $8.5 million and the median settlement was $9 million.

The report also notes that there are now more than $14.7 billion in outstanding plaintiffs’ claims in Canadian securities class actions.

In terms of the types of claims being filed, it says that six cases were filed in 2009 involving allegations of misrepresentations and/or omissions by issuers, including claims brought under the new continuous disclosure provisions; but that there were no filings related to the credit crisis, compared with more than 60 such suits that were filed in the United States (two crisis-related suits were filed in Canada in 2008).

By sector, the mining and financial sectors were the biggest targets, with two cases against gold mining companies, one against a coal mining firm, and three cases against issuers in the financial indsutry, it reports.

“While securities class action litigation is still in its infancy in Canada, the maturation of this type of litigation continued during 2009,” said Mark Berenblut, NERA senior vice president and co-author of the report.

“Most notable this year, because of their potential impact on future trends in Canadian securities class actions, are the decisions of the Ontario Superior Court of Justice certifying three securities class actions, and the decision in IMAX granting leave for the plaintiffs to pursue claims under Part XXIII.1 of the Ontario Securities Act — the first such ruling on an application to proceed with claims under the new secondary market liability provisions of the provincial Securities Acts,” he added.

The report says that the outlook for filings in 2010 may depend on a variety of factors, possibly including additional rulings from the courts, the pace and extent of the economic recovery, and any changes in corporate governance practices of Canadian issuers due to the perception of a growing threat of significant litigation.

IE