Securities class action litigation has been an important part of the corporate and securities litigation environment in the United States and Canada for many years. What has been interesting in more recent years has been the steady rise of collective investor actions outside North America. As these various claims have accumulated, a number of them have developed into significant settlements, as documented in a recent report. ISS Securities Class Action Services has published an interesting report entitled “The Top 25 Non-North American Settlements: Largest Securities-Related Settlements Outside of North America of All-Time” (here) detailing the largest collective investor action settlements in Europe, Australia, and Asia.
The report notes at the outset that “despite the uncertainties in different jurisdictions that allow collective redress around the globe, foreign investors increasingly recognize the need to action and recover losses form securities fraud.” This trend, the report notes, was significantly advanced by the U.S. Supreme Court’s 2010 decision in Morrison v. National Australia Bank, which limited the extraterritorial reach of U.S. courts in securities lawsuits. This ruling effectively eliminated the U.S. courts as a forum for investors who purchased their securities outside the U.S. Investors increasingly have had to look to the courts of their home countries (or elsewhere) for redress.
The report notes that ISS Securities Class Action Services has been tracking and ranking settlements, including settlements outside North America since 1998. The report presents a list of the 25 largest settlements outside of North American as ranked by U.S. dollar value. (All dollar figures reflected below indicate U.S. dollar values.)
The largest settlement in the list is the massive $1.5 billion (€1.3 billion) in the Fortis case, a settlement that the report refers to by the name of the successor company, Ageas. This settlement, which, as detailed here, was entered in the court of Netherlands. It is, as the report notes, the “largest settlement of all time outside North America.” The second settlement on the list is the $1 billion settlement in the Royal Bank of Scotland case in the U.K., the details of which can be found here.
While the largest settlements on the list involve proceedings in Netherlands and the U.K., the country with the most settlements on the list is Australia. Of the top 25 settlements on the list, 17 involved proceedings in Australia. The largest of Australian settlements is the 2012 settlement in the Centro Properties case, which settled for US$200 million. The 17 Australian settlements on the list together total US$1.5 billion. Five of the 17 Australian settlement on the list exceed US$100 million.
Two countries that some readers may be surprised to find that have settlements on the Top 25 list are Japan and Israel. Japan is listed for the settlement in the Olympus case, which settled in 2015 for $92.4 million. The Olympus settlement is No. 12 on the Top 25 list. Israel is listed for the settlement in the Makhteshim Agan Industries Ltd. Case, which settled in 2011 for $44 million. The Makhteshim Agan settlement is No. 22 on the Top 25 list.
The lowest value settlement to make the list is the 2016 settlement in the Billabong International Ltd. case in Australia. The Billagong case settled for US$34 million. Thus, while the largest settlements on the list are massive, and would rank among the largest settlements ever even compared to the largest settlements in the U.S., the size of the settlements further down the list diminishes to less stratospheric levels.
For those who are accustomed to the dollar figures involved in U.S. securities class action lawsuit settlements, the figures on this list – other than the Fortis/Ageas and Royal Bank of Scotland cases and a few of the other largest settlements — may not seem noteworthy. The fact is that the values reflected on this list are extraordinary. There was a time not that long ago when any conversation about significant securities litigation was pretty much limited to a discussion of litigation in the U.S. Then for a time about ten to fifteen years ago, the conversation expanded to Canada and Australia. Now the conversation takes in many countries around the world, as collective investor actions have arisen in many countries – and not just the countries with settlements reflected on the Top 25 list, but a number of other countries as well. Just in 2019, collective investor actions were filed or announced in a wide number of different countries, including Denmark, South Africa, Brazil, Taiwan, Germany, and New Zealand.
The report notes that in Europe in particular there has been significant recent investor collective redress activity. Among the multiple proposed claims launched in recent year against blue-chip companies are actions against such publicly traded companies as Volkswagen, Danske Bank, Daimler, and Steinhoff International. The report notes that while there is no way now to know whether the claimants will succeed in these cases, “these and other pending litigations will likely lead to significant recoveries for investors, and upon settlement, a prominent place with the ISS SCAS ‘Top 25.’”
It is worth noting that of the 25 settlements on the list, only three have a settlement year before 2010. (The Unilever case in the Netherlands settled in 2007 for $406 million, good for third on the list; the Aristocrat Leisure case settled in Australia in 2008 for US$124 million, good for 7th on the list; and the Royal Dutch Shell case in the Netherland settled in 2009 for $389 million, good for 4th on the list). The remaining 22 settlements all took place in 2010 or later. In other words, the vast majority of the settlements on the Top 25 list took place in the last decade.
The rise of the collective investor actions outside North America is a very recent phenomenon. But while the last decade was significant and eventful for the global rise of collective investor actions, the decade ahead is likely to be even more significant and eventful.
One final note. Not all of the cases on the list represent actions by private investors. Ninth largest case on the list, the Tesco Compensation Scheme matter from the United Kingdom, resulting in a 2018 settlement of $106 million, relates to an action by the U.K. Financial Conduct Authority.