Global class action trends unveiled
13 Nov 2024
David Malmstrom, manager for Global Class Action Research & Opt-In Litigation Services at Broadridge, lays out the themes and trends from the company’s most recent Global Class Action Annual Report
Image: Broadridge
The securities class action landscape continues to be robust, yet billions of settlement dollars go unclaimed each year. Whether distributed to other class members or allocated to a cy pres recipient, investors are leaving money on the table. The first step to address this issue is filing a claim. However, the true challenge is maximising recovery amid the growing complexity of settlement administrations and shareholder class actions.
Broadridge’s Global Class Action team annually highlights these complexities, summarising the year’s most intricate asset recovery opportunities and identifying emerging industry trends.
The cases, ranked by their complexity from the perspective of a financial institution’s ability to recover its funds or those of its investors and clients, include all securities and financial antitrust class actions regardless of jurisdiction.
They also encompass US Securities and Exchange Commission (SEC) and Department of Justice (DOJ) enforcement actions, and other ‘mass redress’ cases involving financial instruments.
2023 — A historic year and emerging trends
Several records were set in 2023, including the greatest number of ‘mega settlements’ exceeding US$100 million. Additionally, there were a historic nine financial antitrust settlements, with a combined recovery of over US$650 million.
In 2023, there were over 125 opportunities to recover US$5.5 billion in settlement proceeds across the globe. Broadridge identified more than 300 newly filed class or collective actions worldwide, with the highest concentration in US federal filings at 214 cases, consistent with the historic five-year rolling average for core federal filings. Internationally, England, Switzerland, and the Netherlands led in opt-in jurisdiction filings.
Key industry trends included a focus on environmental, social, and governance (ESG) investing and shareholder activism through securities litigation, especially in EMEA, where most opt-in claims now comprehensively address ESG-related issues. There was also an increase in participation in opt-in litigations, alongside new jurisdictions opening their courts to collective redress claims, such as China’s new Special Representative Action regime, which saw its first settlement of 280 million yuan.
Broadridge also highlighted several trends for clients, including a shift in service offerings by broker-dealers who are now providing holistic claim-filing and asset recovery services, with custodians offering comprehensive recovery support as well. Additionally, Broadridge has been advising its DTCC clients on emerging complexities related to direct payment settlement administrations, particularly from the Delaware Chancery Court.
2023 — A look at the challenges
Various factors determine whether a case will be highlighted in the annual report, all of which affect the ability to file a complete and comprehensive claim.
Broadridge is currently tracking 24 unique case complexity challenges, with new ones emerging as the industry evolves. For example, the rise of novel asset classes such as cryptocurrency settlements requires a new approach to claims filing to maximise recovery.
In 2023, seven of the top 10 most complex cases involved numerous eligible securities. For instance, the Arconic Securities Litigation, which ranked first in the report, impacted Arconic common stock, preferred stock, convertible senior notes, and certain depositary shares. Additionally, corporate actions during the class period were a common challenge, also affecting seven cases. This trend will be prominently featured in 2024, particularly as we enter the de-SPAC era following the SPAC boom during the pandemic.
2024 — A look ahead
As we enter the second half of 2024, there have been 92 settlements totaling US$3.136 billion, with an additional US$1.777 billion in tentative agreements pending preliminary approval. The largest settlements include the Stock Loan antitrust settlement (US$580 million), and securities settlements with Under Armour (US$434 million) and Alphabet (US$350 million).
Other notable settlements this year feature a trio of data breach-related securities class action settlements, a trend first identified in last year’s report. These settlements include Alphabet (US$350 million), Zoom Video Communications (US$150 million), and Okta (US$60 million), marking the first, second, and sixth-largest data breach-related securities class actions of all time.
On the international front, there has been a significant increase in inquiries from clients in the APAC region, which is poised for substantial growth as new firms and funders explore markets and jurisdictional frameworks for mass redress claims. Serco, the British outsourcing conglomerate, reached an agreement to settle opt-in securities claims by a group of investors who alleged the company overcharged the UK government for services in 2013, a scandal that wiped out over 70 per cent of shareholder equity. Additionally, Belgium has become the latest EU member state to comply with the EU Directive on Representative Actions, specifically providing a path for securities class actions under the country’s New Collective Redress Act.
These trends inform the services we provide to our clients. Broadridge continues to expand its suite of services around notification, portfolio monitoring, and class action asset recovery on behalf of asset owners and managers as the industry grows and becomes more complex.
To read the full Global Class Actions Annual Report, visit: www.broadridge.com/report?
Broadridge’s Global Class Action team annually highlights these complexities, summarising the year’s most intricate asset recovery opportunities and identifying emerging industry trends.
The cases, ranked by their complexity from the perspective of a financial institution’s ability to recover its funds or those of its investors and clients, include all securities and financial antitrust class actions regardless of jurisdiction.
They also encompass US Securities and Exchange Commission (SEC) and Department of Justice (DOJ) enforcement actions, and other ‘mass redress’ cases involving financial instruments.
2023 — A historic year and emerging trends
Several records were set in 2023, including the greatest number of ‘mega settlements’ exceeding US$100 million. Additionally, there were a historic nine financial antitrust settlements, with a combined recovery of over US$650 million.
In 2023, there were over 125 opportunities to recover US$5.5 billion in settlement proceeds across the globe. Broadridge identified more than 300 newly filed class or collective actions worldwide, with the highest concentration in US federal filings at 214 cases, consistent with the historic five-year rolling average for core federal filings. Internationally, England, Switzerland, and the Netherlands led in opt-in jurisdiction filings.
Key industry trends included a focus on environmental, social, and governance (ESG) investing and shareholder activism through securities litigation, especially in EMEA, where most opt-in claims now comprehensively address ESG-related issues. There was also an increase in participation in opt-in litigations, alongside new jurisdictions opening their courts to collective redress claims, such as China’s new Special Representative Action regime, which saw its first settlement of 280 million yuan.
Broadridge also highlighted several trends for clients, including a shift in service offerings by broker-dealers who are now providing holistic claim-filing and asset recovery services, with custodians offering comprehensive recovery support as well. Additionally, Broadridge has been advising its DTCC clients on emerging complexities related to direct payment settlement administrations, particularly from the Delaware Chancery Court.
2023 — A look at the challenges
Various factors determine whether a case will be highlighted in the annual report, all of which affect the ability to file a complete and comprehensive claim.
Broadridge is currently tracking 24 unique case complexity challenges, with new ones emerging as the industry evolves. For example, the rise of novel asset classes such as cryptocurrency settlements requires a new approach to claims filing to maximise recovery.
In 2023, seven of the top 10 most complex cases involved numerous eligible securities. For instance, the Arconic Securities Litigation, which ranked first in the report, impacted Arconic common stock, preferred stock, convertible senior notes, and certain depositary shares. Additionally, corporate actions during the class period were a common challenge, also affecting seven cases. This trend will be prominently featured in 2024, particularly as we enter the de-SPAC era following the SPAC boom during the pandemic.
2024 — A look ahead
As we enter the second half of 2024, there have been 92 settlements totaling US$3.136 billion, with an additional US$1.777 billion in tentative agreements pending preliminary approval. The largest settlements include the Stock Loan antitrust settlement (US$580 million), and securities settlements with Under Armour (US$434 million) and Alphabet (US$350 million).
Other notable settlements this year feature a trio of data breach-related securities class action settlements, a trend first identified in last year’s report. These settlements include Alphabet (US$350 million), Zoom Video Communications (US$150 million), and Okta (US$60 million), marking the first, second, and sixth-largest data breach-related securities class actions of all time.
On the international front, there has been a significant increase in inquiries from clients in the APAC region, which is poised for substantial growth as new firms and funders explore markets and jurisdictional frameworks for mass redress claims. Serco, the British outsourcing conglomerate, reached an agreement to settle opt-in securities claims by a group of investors who alleged the company overcharged the UK government for services in 2013, a scandal that wiped out over 70 per cent of shareholder equity. Additionally, Belgium has become the latest EU member state to comply with the EU Directive on Representative Actions, specifically providing a path for securities class actions under the country’s New Collective Redress Act.
These trends inform the services we provide to our clients. Broadridge continues to expand its suite of services around notification, portfolio monitoring, and class action asset recovery on behalf of asset owners and managers as the industry grows and becomes more complex.
To read the full Global Class Actions Annual Report, visit: www.broadridge.com/report?
NO FEE, NO RISK
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
