Prior observers have already noted that in 2017 the value of securities class action lawsuit settlements plunged to lows not seen in years, largely due to from a shortage of large or even moderate settlements. These observations about the lack of larger settlement are underscored by the latest large securities suit settlement report from ISS Securities Class Action Services (ISS). In its annual report, entitled “The Top 100 U.S. Class Action Settlements of All Time (as of December 31, 2017)” (here), ISS reports that only two securities class action lawsuit settlements approved during 2017 were large enough to make the Top 100 list. The report has a number of other interesting observations about securities suit settlements as well.
According to the report, there were 162 securities class action lawsuit settlements approved in 2017, representing an aggregate total of $2.2 billion in settlement funds for distribution. Of these 162 settlements, two made the ISS annual Top 100 list. The first is the $175 million settlement of the consolidated BP Deepwater Horizon securities litigation. The BP settlement came in as No. 88 on the top 100 list. The second of the two settlements approved in 2017 that made the top 100 list is the $210 million Salix Pharmaceuticals settlement. The Salix settlement was good enough for No. 77 on the top 100 list.
The report notes that the settlement numbers tend to ebb and flow over time. Thus, while there were only two approved settlements in 2017 that made the top 100 list, there were 12 approved settlements in 2016 that made the list.
As further evidence of the ebb and flow of the settlement numbers, the ISS reports that already in 2018
“a sizeable $3.5 billion in prospective settlement funds has thus far been announced in 2018 and awaits court approval.” The substantial part of these funds relates to the massive $3 billion Petrobras settlement. (The initial settlement amount was $2.95 billion but a separate settlement with the company’s accountant brought the total amount to $3 billion.) As discussed here, the Petrobras settlement is the largest U.S. securities class action lawsuit settlement in over ten years, and it represents the fifth largest U.S. securities suit settlement of all time. As noted here, on March 1, 2018, the Court preliminarily approved the Petrobras settlement.
In addition to its Top 100 list, the report has a number of other interesting observations. For example, the report notes that of the Top 100 settlements, 91% involved an institutional investor lead plaintiff, and only 9% involve non-institutional lead plaintiffs. This arguably in unsurprising, as the institutional investors are likeliest to get involved in the largest and most serious cases.
The report also includes a breakdown of the Top 100 settlements by lead plaintiffs’ firm. The firm with the highest number of Top 100 securities settlements, including the second largest of all time (the WorldCom settlement) is the Bernstein Litowitz firm, which was lead counsel or co-lead counsel in 33 of the Top 100 settlements. The Robbins Geller firm had the second most of the Top 100 securities suit settlements, inclusive of predecessor firm’s settlements, with 17 of the Top 100 settlements (including the No. 1 settlement, in the Enron case). The other plaintiffs’ firms with ten or more of the Top 100 settlements are the Milberg firm (14); the Labaton Sucharow firm (13); the Grant & Eisenhofer firm (12); and the Barrack, Rodos & Bacine law firm (10).
The ISS report also includes a breakdown of the top 100 settlements according to whether or not the involve restatements. According to the report, 59% of the Top 100 settlements involved restatements, while 41% did not. Even though a significant number of the Top 100 settlements did not involve restatements, the largest settlements on the list tend to have involved restatements. Seven of the ten largest settlements involved restatements, and 16 of the top 25.
The report also includes a list of the Top 50 SEC Disgorgements. Three of the disgorgements in 2017 made the Top 50 list, compared to only 1 in 2016. The three disgorgements added to the list in 2017 are: J.P. Morgan Securities ($222.4 million, 17th on the list); Jay Peak Receivership Entities ($150 million, 24th on the list); and Stanford International Bank ($120 million, 29th on the list).