Class-action settlements up, new filings down: ISS

Securities class-action settlement activity edged higher in the first half of 2021, according to new data from ISS Securities Class Action Services.

U.S. class-action settlements rose 11.5% in the first half, compared with the same period last year, ISS reported — with settlements totalling US$2.3 billion.

The number of cases settled was up 34% year over year as well.

Both this year and last, the total value of settlement activity was powered by one mega settlement. This year, it was a US$1.2-billion settlement involving Valeant Pharmaceuticals, while last year, it was a US$1-billion deal with American Realty Capital.

Settlement activity in Canada was stable in the first half, ISS said.

This year, there were two class action settlements totalling $6.45 million. Last year, also saw two deals, amounting to $6.35 million.

ISS noted that settlement activity was similarly stable in Australia, and that there were no class-action settlements in Europe or Asia. Indeed, there hasn’t been an investor class-action settled in either region since mid-2018, ISS reported.

There was one tentative deal reached involving shareholders in Germany and South Africa, but that settlement isn’t expected to be finalized until late 2021 or early 2022, ISS said, noting that the deal is expected to exceed €480 million.

While the value of settlements are up, ISS also reported that the volume of new shareholder class actions continued to decline. In 2020, the number of filings was down 22% — and that trend has continued into the first half of 2021, it said.

“The cause of this decline was almost certainly Covid related,” ISS noted.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.