Thirteen of the 100 all-time largest securities class action lawsuit settlements were finalized in 2016, the highest number of settlements during any one year period, according to a recent report from Institutional Shareholder Services (ISS). Two of the 2016 settlements among the top 100 were among the eleven largest of all times. The report, which also ranks the plaintiffs’ law firms by the number of top 100 settlements in which they were involve, entitled “The Top 100 U.S. Settlements of All Time,” can be found here.
The report reflects the top 100 settlements since January 1, 1996, as of December 30, 2016. The report does not include non-U.S. settlements. The settlement year in which a settlement is listed corresponds to the year the settlement, or the most recent partial settlement, received final approval from the relevant court. Partial settlements in a case are combined into a total settlement amount.
The 13 settlements added to the top 100 list in 2016 is the highest number of settlements to make the list in any one year period; there were a total of 12 settlements added to the top 100 list in 2013. The 13 top 100 settlements finalized in 2016 totaled $5.6 billion, the largest aggregate approved settlement fund from the top settlements in any single year.
Two of the settlements finalized in 2016 were worth over $1 billion: the Household International settlement (about which refer here), worth $1.575 billion, good enough for seventh on the all time list; and the Merck Vioxx settlement (discussed here), which totaled $1.062 billion (inclusive of the $232 million fund for fees and expenses), good enough for eleventh on the list.
It is probably worth noting with respect to the Merck Vioxx settlement that, as massive as it was, it was still not large enough to crack the top ten. In order for a future settlement to reach the top ten, it will have to exceed the $1.074 billion settlement reached in the second Nortel Networks securities suit. In order for a future settlement to reach the top 100 list, it will have to exceed $150 million (which was the settlement amount in several different suits).
Of the settlements on the top 100 list, 91% had an institutional investor lead plaintiff, while only 9% had a non-institutional investor lead plaintiff. While this could mean that the involvement of institutional investor lead plaintiffs leads to larger settlements, it could also mean that the institutional investors only get involved as lead plaintiffs in larger cases, and even arguably more meritorious cases.
The report breaks the settlements on the list down by most frequent lead or co-lead counsel. It is important to understand that the report credits firms for a settlement in any case in which they were lead counsel or in which they served as co-lead counsel with another firm.
The firm that that participated as lead or co-lead counsel in settlements listed in the top 100 is the Bernstein, Litowitz, Berger & Grossman law firm, which served as lead or co-lead counsel in 35 of the top 100 cases ( including half of the cases in top 20), resulting in a total of $25 billion in settlement funds.
The firm with the next largest number of settlements as lead or co-lead counsel is the Robbins Geller Rudman & Down law firm, which served as lead or co-lead in 17 of the top 100 cases, resulting in $15.3 settlements. A June 13, 2017 Law 360 article about the ISS report (here, subscription required) includes statements from a Robbins Geller spokesperson noting that, in addition to acting as lead counsel in the largest securities class action settlement recover (the $7.2 billion in settlements in the Enron case), the firm served as sole lead counsel in more of the 25 largest recoveries than any other firm.
Three firms (Milberg; Labaton Sucharow; and Grant & Eisenhofer) tied for third in terms of the number of settlements in which they acted as lead or co-lead counsel. Each of these firms served as lead or co-lead counsel in 14 of the settlements on the list.
Ranking the plaintiffs’ firms by total settlement values rather than by number of settlements, the third ranked firm is the Barrack, Rodos & Bacine firm, which acted as lead or co-lead counsel in a total of ten settlements that resulted in a total settlement value of $13.2 billion.
According to the report, 42% of the all-time Top 100 securities class action lawsuit settlements involved companies with accounting restatements; 58% of the top settlements did not involve accounting restatements. However, four of the top five settlements, seven of the top ten, and fourteen of the top 20 involved accounting restatements.
The top 100 settlements list includes only securities class action lawsuit settlements; it does not include settlements with the SEC. The report does separately set out the top 50 disgorgements paid out in SEC claims. The all-time top SEC claim disgorgement payment is AIG’s $800 million deal, which was finalized in 2008. The largest disgorgement added to the list in 2016 was the $602 disgorgement that the SEC finalized last year with hedge fund CR Intrinsic, which is third on the report’s list of top 50 SEC claim disgorgements. It will be interesting to see if the U.S. Supreme Court’s June 5, 2017 decision in the Kokesh case, which (as discussed in detail here) held that a 5-year statute of limitations applies to SEC disgorgement claims. The ruling could restrict the period of wrongdoing with respect to which the SEC can seek to have supposedly ill-gotten gains disgorged.
2016 Securities Class Action Litigation Settlements Generally: The ISS report is focused on the largest settlements. As discussed here, 2016 was a big year for securities class action lawsuit settlements generally, not just for the largest settlements. As I noted in my prior post, the number of securities class action settlements as well as the aggregate, average, and median securities class action settlement values all increased in 2016 compared to the prior year, according to the latest annual securities lawsuit settlement report from Cornerstone Research.
A Comment About Non-U.S. Collective Investor Action Settlements: As I noted above, the ISS list includes only U.S. securities class action lawsuit settlements, it does not include settlements reached in collective investor actions in countries other than the U.S. Specifically, the list does not include the $1.3 billion settlement reached in the Netherlands in the Fortis collective investor action (about which refer here), or the enormous settlement reached, in piecemeal fashion in December 2016 and in June 2017, in the RBS collective investor action in the U.K. (about which refer here). The total value of the RBS settlements is £1 billion (about $1.28 billion at current exchange rates).
To be sure, neither of these settlements has yet finally and fully been approved by the relevant courts, so they would not make the list even if the list did include non-U.S. cases. But if they were on the list, they would rank, respectively, as the eighth and ninth largest of all times. The fact that these non-U.S. collective investor actions rank (or will rank when final) among the top ten all time securities suit settlements underscores how extraordinary these settlement are, and highlights a point that might get overlooked if (as has always been the case in the past) attention is focused exclusively on U.S. developments. As I have said before, the global rise of collective investor actions is the single most significant development in the D&O claims arena today.