The financial crisis still echoes in the form of litigation, and the continued wrangling has helped spur a rise in securities class action settlement dollars. The settlement amounts rose 46 percent in 2013 to $4.8 billion, according to a report by Cornerstone Research.
The huge increase was fueled by six huge settlements topping $100 million, accounting for 84 percent of the total. That’s the second-highest yearly take for $100 million “mega” awards in the last 10 years.
The six mega suits came either from lenders and servicers connected with the subprime mortgage meltdown or from pharmaceutical companies.
The year also saw a 17.5 percent increase in the number of court-approved settlements to 67, reversing a four-year decline.
In other figures:
- The median settlement for cases with a public pension as a lead plaintiff was $23 million, more than seven times the $3 million for cases without a pension at the helm.
- In 2013, 32 percent of settlements that were less than $10 million involved Chinese reverse mergers.
- The proportion of settled cases in 2013 involving accounting allegations dipped to a 10-year low.
The study said that in the future, the Securities and Exchange Commission might get involved more often following class-action suits. Settlements have recently not seen follow-through by SEC enforcers because of the usual long lag time between private settlements and the regulator’s enforcement actions, the report noted.
But the future of these cases could be up in the air if the U.S. Supreme Court severely limits investors’ ability to get large-scale class actions certified in the Halliburton case it heard earlier this month, said Cornerstone expert Joseph Grundfest, who is also the director of the Stanford Law School Securities Class Action Clearinghouse.