Two Settlements Included in ISS SCAS’ Top 100 List
ROCKVILLE, Md. (February 18, 2020) –There were 101 monetary settlements of class action suits filed in the United States valued at $3.17 billion during 2019, according to a new report released today by Securities Class Action Services LLC, a subsidiary of Institutional Shareholder Services.
The two largest settlements from 2019 were Cobalt International Energy which settled for $389.6 million and Alibaba Group Holding which settled for $250 million. Both settlements were large enough to qualify for the list of the top 100 largest U.S. class action settlements approved since the passage of the Private Securities Litigation Reform Act of 1995.
The 2019 total represents a significant decrease compared with 2018 when U.S. securities class actions reached $5.84 billion in value from 126 approved monetary settlements. One action in 2018, the $3 billion settlement in the Petrobas matter, accounted for much of the disparity between the two years.
“While 2019 was not as rich as 2018 in terms of overall settlement value, the settled cases represented a significant victory for shareholders,” said Ivar Eilertsen, Head of ISS Securities Class Action Services.
Cobalt was charged with violations of the Employment of Manipulative and Deceptive Practices rule (Rule 10b-5) and the Civil Liabilities on Account of False Registration Statement (SEC 11 of the Securities Act of 1933). Alibaba was charged with violating Rule 10b-5 of the Securities Act which stemmed from misstatements made during the company’s initial public offering.
Eight large capital companies listed on the S&P 500 index settled cases in 2019 for a total of $439.1 million.
A total of 74 federal court settlements were linked to violations of Rule 10b-5, three of which stemmed from alleged insider trading, while another three were a by-product of corporate transactions. Additionally, six federal settlements were made in connection with allegations of violations of Generally Accepted Accounting Principles (GAAP).
Another 17 settlements were tied to violations associated with the Civil Liabilities on Account of False Registration Statement (SEC 11 of the Securities Act of 1933), of which 13 related to stock offerings completed by the relevant companies. Four companies that settled in federal court were required to restate their financials and were part of the six settlements that alleged violations of GAAP.
The courts that handled the greatest volume of cases were the United States District Court (Southern–New York) which finalized 25 cases, and ten settlements each in two United States California District Courts (Central and Northern).
Two major settlements are expected to be completed in 2020 including one involving Valeant Pharmaceuticals International and another with American Realty Capital Properties. Both settlements will likely surpass the $1 billion threshold, according to Eilertsen. Other pending settlements include cases involving First Solar, SCANA Corporation, and Snap.
To download a copy of the report and for further information on ISS’ Securities Class Action Services division, please visit us at: https://www.issgovernance.com/scas.
Editors: Please note that any citation of statistics contained within the report should be attributed, in full, to “ISS Securities Class Action Services.”