One of the more noteworthy developments in recent years has been the increasing frequency of collective investor actions outside the U.S. In certain instances, these cases have resulted in settlements that rival the largest U.S. securities class action lawsuit settlements in size. The largest of the settlements outside the U.S. are compiled in an October 31, 2022 report from ISS Securities Class Action Services entitled “The Top 25 Non-North American Settlements: Largest Securities-Related Settlements Outside of North America of All-Time.” The report, which updates ISS SCAS’s earlier research and was written by Jeff Lubitz, Managing Director, ISS Securities Class Action Services, and Jarett Sena, Director of Litigation Analysis, ISS Securities Class Action Services, can be found here.
The development of collective investor remedies outside the U.S. received a substantial boost from the 2010 U.S. Supreme Court decision in Morrison v. National Australia Bank. Morrison clarified that the U.S. securities laws do not apply to securities transactions that take place on non-U.S. exchanges or otherwise outside the U.S. Investors who purchased their securities outside the U.S. increasingly have turned to the courts of their home countries (or of other jurisdictions where relief may be available).
As the report notes, “those who invested in other countries have increasingly looked to collective investor actions in courts abroad to recover losses resulting from securities fraud.” These efforts in turn have led to the development of collective action procedures in a number of jurisdictions. While these processes generally are not as well developed as the securities class action procedures in the U.S., “there have been meaningful developments in different jurisdictions that have allowed defrauded investors to recover significant losses.”
A number of these investor recovery efforts have resulted in significant settlements, the largest 25 of which are listed in the report. It is important to note that the report relates to non-North American settlements. The list not only does not include U.S. settlements, but it also does not include Canadian settlements. In addition, although addressed primarily to settlements of civil actions, the report’s list includes a trial verdict (in the Chinese case of Kangmei Pharmaceuticals). The list also includes the U.K.’s Financial Regulatory Authority’s 2018 settlement with Tesco plc. The list pertains to cases filed on or after January 1, 1997.
Of the 25 listed, five are new since ISS SCAS issued its last report, including three of the top ten, and most notably, the February 2022 Steinhoff Holdings NV global settlement, which is the largest of all time outside North America. The €1.4 billion Steinhoff settlement is noteworthy not only for the size but also for the fact that it resolved litigation in three different jurisdictions: South Africa, the Netherlands, and Germany.
With the Steinhoff settlement included, the Netherlands now has three of the top five largest securities-related settlements outside of the U.S. and five of the top 25. The Netherlands settlements on the list taken together, total, in U.S. dollar terms over $4 billion, by far the largest total amount of any of the countries with settlements reflected on the list. By way of contrast, the total value in U.S. dollar terms of settlements in Australia, which has the most settlements listed (15 out of the 25), is about $1.517 billion. The total value of U.K settlements, at about $1.515 billion in U.S. dollar terms, is only slightly below that of Australia.
Two countries are new to the list: South Africa, in connection with the Steinhoff settlement, and China, in connection with the $385 million verdict in the Kangmei Pharmaceuticals case (discussed in detail here).
The largest settlements on the list are enormous — the top three exceed $1 billion. The size shrinks quickly as you go down the list, however. The 25th case on the list weighs in at $55 million. 12 of the cases on the list are under $100 million — all very sizeable settlements, but relatively smaller compared not only to the largest U.S. settlements but even to the jumbo settlements on the top of the list.
Many of the settlements on the list are of relatively recent vintage; the oldest settlement on the list (GIO Australia Holdings Limited, $73.3 million) is from 2003, and 20 out of the 25 settlements are from 2010 or later.
The Top 25 list obviously includes only cases that have been resolved. A number of very high profile collective investor actions outside of North America remain pending, including, as the report notes, actions against Volkswagen, Shell, Wirecard, BHP, Airbus and Danske Bank. Of course, it remains to be seen whether these cases will result in significant settlements. But the fact that these high profile cases are pending underscores the fact that the development of collective investor actions outside the U.S continues. There are in fact a number of key cases outside the U.S. to watch.