Among jurisdictions outside the U.S. with active securities litigation regimes, one of the most noteworthy and important is Canada. Shareholder litigation in Canadian courts and under Canadian law has been an important feature of the global investor litigation picture for several years. According to the latest annual report from NERA Economic Consulting, the number of Canadian securities class action lawsuits declined in 2022 for the second year in a row, and the number of 2022 filings was also slightly below the long-term annual average number of filings. In addition, as detailed below, the median settlement amount for settlements of Canadian securities class action lawsuits has decline in the most recent years compared to prior years. The report, which is entitled “Trends in Canadian Securities Class Actions: 2022 Update,” can be found here.

The Number of 2022 Filings: According to the report, there were eight new securities class action lawsuits filed in Canadian courts in 2022, two fewer than the ten new securities suits filed in 2021, and well below the 15 new cases filed in each of 2019 and 2020. The eight new lawsuits are also below the annual average number of new securities suit filings of approximately 10 for the period 2006-2021. Six of the eight new cases were filed in Ontario, two cases were filed in British Columbia. For the first time in 20 years, there were no new securities suits filed in Quebec.

Statutory Secondary Market Cases: One of the significant factors in the number of securities suit filings in Canada is the impact of the civil liability provisions of the statutory secondary market continuous disclosure regime, which went into force in Ontario at the end of 2005 and in other provinces in subsequent years. Thus, seven of the eight new securities lawsuits filed in Canadian courts in Canada in 2022 alleged violation of the statutory secondary market civil liability provisions. The seven secondary market cases in 2022 was slightly below the 17-year annual average number of statutory secondary market cases of 7.5 per year.

Cryptocurrency Cases: Three of the eight new 2022 Canadian securities suit filings involved companies in the cryptocurrency sector, an industry that also saw significant amounts of securities litigation activity in the U.S. in 2022. Two of these three new lawsuits against cryptocurrency companies involved alleged statutory secondary market violations. The third related to a cryptocurrency exchange (Binance), brought on behalf of a class of purchasers of cryptocurrency purchasers.

Non-Energy Minerals Sector Cases: Filings against companies in the non-energy minerals sector have long been about an important part of securities class action lawsuit filings in Canada. However, the number of annual filings against companies in the non-energy minerals sector has declined in recent years. Thus, during the period 2012 to 2017, lawsuits against companies in the non-energy minerals sector represented 52% of all new filings. By contrast, during the period 2018 to 2022, filings against companies in the non-energy sector represented only 23% of all new filings. In 2022, three of the eight new filings were against companies in the non-energy sector, representing about 37.5% of all new 2022 filings.

Parallel U.S.-Canada Case: An important feature of Canadian securities class action litigation is that the Canadian cases also involve parallel U.S. cases. For example, in 2022, two of the eight new Canadian cases also had a parallel U.S. at the end of the year.

U.S. Securities Litigation Against Canadian Companies: U.S.-listed Canadian companies also become involved in U.S. securities litigation when there is no parallel Canadian action. For example, in 2022, five Canadian-domiciled companies were named as defendants in U.S. securities class action lawsuits where there was no parallel Canadian action as of the end of the year. In the five-year period 2018 to 2022, only 36% of the cases filed in the U.S. against Canadian-domiciled companies also involved a parallel action filed in Canada, whereas during the period 2006 to 2017, 51% of U.S. cases against Canadian-domiciled companies involved parallel Canadian actions. The 2022 median settlement amount ($3.2 million) was the lowest annual median during any year in the 2006-2022 time period. (All historical settlement amounts are adjusted for inflation.)

Case Resolutions: Of the 115 securities class action lawsuits filed in Canadian courts during the period 2006-2022, thirty remained pending as of the end of 2022. Of the 85 filings that had been resolved by the end of 2022, 33 of the filings (39%) were resolved by way of settlement, and 52 of the filings (61%) were dismissed.

2022 Canadian Securities Cases Settlements: Three Canadian securities class action lawsuit settled in 2022. The largest settlement was in the Northland Resources, S.A. case, which settled for C$10.2 million. The two other settlements in 2022 involved Victoria Gold Corp., which settled for C$0.9 million, and Braixa Scientific Corp., which settled for C$3.2 million.

Median Settlement Amounts: The median settlement amount for Canadian securities class action lawsuit filings has varied over time, but has generally decreased over time. Thus, for the five-year period 2018 to 2022, the median amount for the 28 settlements of Canadian securities class action lawsuits was C$5.8 million, whereas the median settlement amount for the 29 settlements reached during the six-year period 2012 to 2017 was C$13.2 million, and the median settlement amount for the 28 settlements in the period 2006 to 2011 was $17.6 million. The C$5.8 million median during the period 2018 to 2022 was 56% lower than the 2012-2017 median and was 67% lower than the 2006 to 2022 median.