NERA Economic Consulting has released a study entitled "Recent Trends In Shareholder Class Action Litigation: Bear Market Cases Bring Big Settlements." The study reaches the following notable conclusions:
(1) There was a 33% increase in the mean settlement value of securities class actions in 2004 ($27.1 million in 2004, up from $20.3 million in 2003). NERA found that this increase was fueled by cases dealing with higher investor losses and is likely to continue for the next several years.
(2) On average, a 1% increase in investor losses results in a .4% increase in the size of an expected settlement.
(3) Although a number of very large settlements caused the increase in the mean settlement value, the dollar value of the typical settlement is actually falling. Over 70% of the settlements in 2004 were valued at $10 million or less.
(4) Over a five-year period, a public corporation faces a 10% probability of facing a securities class action. This probability has risen since the passage of the PSLRA.
(5) The Sarbanes-Oxley Act of 2002 does not appear to have had an impact on the number of securities class action filings or the size of settlements.
NERA's press release on the study can be found here.Posted by Lyle Roberts at February 14, 2005 6:12 PM | TrackBack