Driven largely by several mega-settlements (that is, settlements of $100 million or greater), the aggregate value of global securities class action settlements in 2020 totaled 61% more than in 2019, according to a new report. The report, entitled “2020 Securities Related Settlements Exceed $5.8 Billion,” and published in a January 18, 2021 post on the Harvard Law School Forum on Corporate Governance, was written by Jeff Lubitz of ISS Securities Class Action Services. The report can be found here.
The securities settlement data includes not only securities class action lawsuit settlements in U.S. state and federal courts, but also includes U.S SEC disgorgements, as well as securities class action lawsuit settlements outside the U.S. (SEC disgorgement cases added $93.3 to the aggregate total.) The settlement date is determined based on the date on which the settlement is finalized, rather than, for example, the date the settlement is announced. For purposes of aggregate totals, the amounts of non-U.S. settlements settled in currencies other than the U.S. dollar were converted to U.S. dollar values.
According to the report, the aggregate dollar amount of all settlements across these various categories totaled $5.84 billion in 2020, which represents an increase of 61% over the $3.62 billion in equivalent settlements in 2019.
The primary difference between 2019 and 2020 was the number of mega settlements in 2020 compared to 2019. The 2020 settlements included two settlements over the $1 billion mark: the $1.21 billion settlement in the Valeant Pharmaceuticals securities suit, and the $1.025 settlement in the American Realty Capital securities suit. The 2020 settlements also included the $350 million settlement in the First Solar securities suit, and the $240 million settlement in the Signet Jewelers securities suit. By contrast the largest settlement in 2019 was the $389.6 billion settlement in the Cobalt International Energy securities suit. Interestingly, 2020 was the first year since 2016 in which there were two settlements over $1 billion.
Though the total value of settlements grew substantially in 2020 relative to 2018, the number of settlements in 2020 was only incrementally higher than in 2019. There was a total of 133 securities class action settlements in 2020, which represents a 13% increase over the 188 settlements finalized in 2019. Of the 133 total global settlements, 91 were U.S. federal court settlements and 23 were U.S. state court settlements, meaning that 117 of the 133 settlements tracked in the report U.S. court settlements. Of the 117 U.S. court settlements, six involved S&P 500 listed companies. Among the S&P 500 companies with a securities settlement in 2020 was Equifax, which, as described here, settled the high-profile data breach-related securities class action lawsuit in which it was involved for $149 million.
There was a total of 16 settlements outside the U.S. in 2020, ten in Canada and six in Australia. According to the report, there were no other settlements outside the U.S. The ten Canadian settlements totaled $117.2 million. The six Australian settlements totaled $173.2 million. The largest Canadian settlement was with Valeant Pharmaceuticals for C$94 million, and the largest Australian settlement was Spotless Group Holding for A$95 million.