* Fewest monetary accords since laws overhauled in 1995
-NERA
* Greater emphasis on lawsuits challenging mergers
* Pace of new securities lawsuits in line with recent trend
By Jonathan Stempel
July 24 (Reuters) – The pace at which investors bringing
U.S. securities fraud cases are actually recovering money in
settlements has fallen to the lowest since laws governing
class-action litigation were overhauled in the mid-1990s.
Just 31 settlements yielded monetary compensation to
investors between January and June, projecting to 62 for the
full year, according to a study released Tuesday by NERA
Economic Consulting.
That would be down from 87 monetary settlements in 2011,
itself the fewest since adoption of the Private Securities
Litigation Reform Act of 1995.
NERA attributed the decline to an increased emphasis on
litigation challenging mergers. Such cases are often resolved
when the target company provides additional disclosures to
investors, and agrees to cover fees of those investors’ lawyers.
Including settlements to resolve “merger objections,” just
49 cases settled through June, according to NERA. That projects
to 98 for the year, down from 123 in 2011, and the fewest since
1999.
In dollar terms, the average settlement excluding merger
objection cases was $71 million from January to June, though
NERA said the average was distorted by a $1.01 billion accord
with the insurer American International Group Inc, the
last portion of which won approval this year.
Excluding AIG and settlements over laddering in initial
public offerings — where underwriters inflate prices by handing
out shares of hot IPOs to buyers who promise to buy more later
— the average settlement was $41 million, and the median was
$7.9 million, NERA said. These amounts were in line with levels
typical of the last five years.
The rate at which federal securities lawsuits seeking
class-action status are being filed also mirrors recent levels.
NERA said 116 cases were filed from January to June,
projecting to 232 for the year, up from 224 in 2011. The record
high is 276, set in both 1998 and 2002.
Just 10 of the new cases related to Chinese companies,
compared with 38 for all of 2011, reflecting what NERA called
increased potential legal costs and tighter requirements for
companies seeking U.S. listings through “reverse mergers.”
The record high is 276, set in both 1998 and 2002.
The largest securities class-action settlement remains the
$7.2 billion accord over the 2001 collapse of the energy company
Enron Corp.
