The number of global class action securities litigation settlements increased by 50 per cent in 2021, with total settlements reaching more than US$3 billion, according to a Broadridge Class Action Report.
Among its key findings, the report identifies a rise in special-purpose acquisition companies (SPACs) and cryptocurrency-related securities litigation— the first of which was the Block.one case which saw a settlement amount of US$27,500,000.
The report alleges that the blockchain-focused software development company sold billions of dollars’ worth of unregistered EOS tokens during a yearlong initial coin offering.
Investors claim that the tokens were “issued pursuant to a materially false and misleading prospectus”, and that Block.one “disseminated false and misleading statements concerning the EOS tokens during the class period”.
The lawsuit alleges that the company’s ‘improper conduct’, including funnelling funds to its trading arm in Hong Kong, resulted in a sharp decline in the price of the tokens.
The report also highlights a substantial reduction in merger and acquisition (M&A) class action filings, and an increased focus on environmental, social and governance (ESG) investors using securities class and collective actions as a tool for enforcing shareholder values.
Additionally, the Broadridge report provides an in-depth analysis of the 10 most complex class actions involving financial instruments in 2021— elaborating on the allegations, challenges, court participants, settlement information and administrative dates of the cases.
Steve Cirami, Broadridge class actions leader, comments: “Last year we watched the number of settlements rise by 50 per cent as cases continue to be increasingly complex and global. The landscape continues to change dramatically, with more countries enacting class action laws. At the same time, we are now seeing more settlements involving unique and complex financial instruments, commodities and new asset classes, such as cryptocurrencies.”
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