Can you explain how securities class actions fit within the world of asset servicing and what trends are evolving?
Class actions can be a complex and time-consuming process that requires specialised expertise and technology to ensure class actions are handled efficiently and accurately. Class actions have historically been an afterthought within the financial services industry. Firms tended to focus on process improvement within other areas of asset servicing, leading to manual processes in the class actions space that are prone to error and potential losses.
One trend evolving is the increasing use of technology to streamline the process. Firms are now investing in technology that can help automate and simplify the handling of class actions, reducing costs and increasing efficiency. This trend is likely to continue as securities class actions become ever more complex and volumes continue to increase.
Another trend emerging is an increased focus on transparency and accountability. Investors, especially institutional investors with significant holdings, are becoming more active in monitoring and challenging the class actions process. As a result, firms are under pressure to provide more detailed and accurate information to their clients.
In this globally changing landscape, what are the unique needs of global custodians as it pertains to class actions, and what are the unique challenges they face?
Probably the biggest challenge is complexity. There are significant and material differences that apply in different jurisdictions. Some jurisdictions have no class actions procedure, while others limit class actions to specific causes of action.
Global custodians often operate in multiple jurisdictions, each with its own regulatory requirements and legal frameworks for securities class actions. They need to navigate and comply with these varying regulations while ensuring consistent and efficient handling of class actions across different markets.
Other unique challenges faced by global custodians in handling class actions include data management and technology integration. Global custodians deal with large volumes of data related to client holdings, transactions, and class action notifications. Implementing effective data management systems and integrating technology solutions to automate processes and ensure accuracy can be complex and resource-intensive.
Another challenge relates to compliance with regulatory requirements. Global custodians must adhere to a multitude of regulatory requirements across jurisdictions when handling class actions, including data privacy laws, reporting obligations, and legal standards for client representation. Staying abreast of evolving regulations and ensuring compliance can be very demanding.
Lastly, resource allocation and expertise. Managing class actions requires specialised expertise in legal, regulatory, and operational aspects. Global custodians need to allocate sufficient resources to handle class actions effectively, including hiring legal staff, partnering with external legal counsel, and investing in training and technology.
How is Broadridge and its team of class action experts helping clients to meet those needs and manage challenges?
Broadridge’s Global Class Action services team is comprised of more than 70 dedicated members who each have 10-20 years of industry expertise.
Our team includes members with distinguished careers dedicated to class actions, including securities class action litigators, settlement programme designers, claims administrators, claims auditors, data analysts, and QA and anti-fraud professionals.
This range of expertise puts Broadridge in a unique position as many members of the team have first-hand experience of working at some of the biggest global settlement administrators and bring a deep understanding of the settlement administration process from end to end, as well as a high level of strategy and efficiency to the management of all claims.
The Broadridge Global Class Action services team deploys a client advocacy model, in which they proactively manage the claim process and individual claims to maximise client recoveries and ensure that all Broadridge managed claims satisfy claim program timing and requirements.
Each of our clients are assigned a relationship manager who works to provide active management of the securities class action asset recovery programme.
Under the Broadridge model, we leverage our expertise to understand clientsʼ data, analyse specific Court requirements, and check behind the administrator. If necessary, we will advocate on the client’s behalf with the administrator, class counsel, and/or the court to maximise recoveries.
How is technology and innovation at Broadridge helping clients to uncover new opportunities for ways to maximise recoveries and minimise risk?
The combination of Broadridge’s cutting-edge technology infrastructure and robust securities litigation expertise has helped to augment securities class action programmes across the world.
We are continually investing in the infrastructure in order to deliver market-leading technology to our customers. We have dedicated engineers that investigate new technologies to improve our overall innovation, efficiency, and quality. We continue to evolve our class action service based on industry changes and client feedback to keep us up to date.
One key development in the past few years has included the rollout of a newly designed, dynamic Global Class Actions Client Portal, allowing insights right at our clients’ fingertips.
We are continually developing the technology and recruiting industry experts for our Global Class Actions Service to ensure that it remains the most efficient and accurate solution available in the market.
What does the future landscape look like for global custodians managing securities litigation? How is their role changing?
The future landscape for global custodians managing securities litigation is expected to continue to evolve in response to various factors shaping the financial industry, the regulatory environment, and technological advancements.
Global custodians will need to place a greater emphasis on regulatory compliance and risk management in the context of securities litigation.
They will need to stay abreast of changing regulatory requirements, implement a robust risk assessment framework, and establish governance structures to ensure adherence to legal and compliance standards.
Secondly, Global custodians will need to adopt a more client-centric approach in managing securities litigation, focusing on enhancing client communication, providing transparency throughout the litigation process, and addressing client needs and concerns effectively.
This includes offering proactive updates, clear reporting, and tailored solutions to meet client expectations. One example of this is the potential impact a large class action payment can have to a mutual fund’s net asset value (NAV). Asset managers and fund accountants need to stay abreast of the timing of significant payments to properly account for them.
Global custodians may also increasingly collaborate with external partners, such as legal firms, data providers, and technology vendors such as Broadridge, to strengthen their capabilities in managing securities litigation. By forming strategic alliances and leveraging specialised expertise, global custodians can enhance their service offerings and deliver value-added solutions to clients.
Lastly, global custodians are expected to incorporate environmental, social, and governance (ESG) considerations into their securities litigation management practices, reflecting the growing importance of ethical practices, sustainability, and social responsibility in the investment industry. This includes aligning securities litigation strategies with ESG principles and integrating ESG factors into decision-making processes.
Overall, the future landscape for global custodians managing securities litigation is characterised by a shift towards technology-driven solutions, regulatory compliance, client-centricity, collaboration, and ESG integration. Global custodians will need to adapt to these trends, enhance their capabilities, and embrace innovation to navigate the evolving challenges and opportunities in the securities litigation space.
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