The Top 100 U.S. Class Action Settlements of All Time

Jeffrey Lubitz is Executive Director and Mark Lloyd Flores is Vice President at ISS Securities Class Action Services. This post is based on their ISS memorandum.

Executive Summary

During 2019, ISS Securities Class Action Services (ISS SCAS) recorded 101 approved monetary settlements filed in the United States (U.S.) valued at $3.17 billion, that are available for distribution to parties in each settlement. Only two settlements were large enough to qualify for the Top 100 list:

  • Cobalt International Energy—$389.6 million
  • Alibaba Group Holding—$250 million

The 2019 totals are a significant decrease compared with 2018 when U.S. securities class actions totaled $5.84 billion from 126 approved settlements. One action, the $3 billion Petrobas settlement, accounts for much of the disparity between the two years.

Federal court settlements were largely tied to violations of the Employment of Manipulative and Deceptive Practices rule (or Rule 10b-5 of the Securities and Exchange Act of 1934). Of the 105 settlements, 84 received judgments in federal courts. A total of 74 federal court settlements were tied to Rule 10b-5, three of which stemmed from alleged insider trading, and another three were a byproduct of corporate transactions. Additionally, six federal settlements were made for violations of Generally Accepted Accounting Principles (GAAP), and four companies were identified as having to restate their financials.

On the other hand, 17 of the 84 settlements were tied to violations associated with the Civil Liabilities on Account of False Registration Statement (SEC 11 of the Securities Act of 1933) where 13 companies completed their stock offerings. 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. Seven large cap companies listed on the S&P 500 index settled in 2019 for a total of $377 million.

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).

In addition to federal court settlements, 21 of the 101 settlements in 2019 were completed in state courts. Twelve state court settlements addressed violations of fiduciary duties resulting from corporate transactions. In addition, seven state court settlements were associated with violations of SEC 11 which stemmed from a company’s public offerings. The Delaware Chancery Courts and the California Superior Courts handled eight approved settlements apiece in 2019.

Of the two 2019 settlements recorded in the Top 100, Cobalt International Energy, Inc. was charged with 10b-5 and SEC 11 allegations. Alibaba was charged with violating rule 10b-5 of the Securities Act which stemmed from misstatements made during the company’s initial public offering. The Cobalt action occurred in the Southern District of Texas and was led by Bernstein Litowitz Berger & Grossmann and Entwistle & Cappucci. Alibaba’s action occurred in the Southern District of New York and was led by The Rosen Law Firm.

While 2019 was a relatively slow year in terms of overall settlement value, the U.S. securities class action sector will likely be more active during 2020. Two major actions are close to reaching a settlement, one with Valeant Pharmaceuticals International, Inc. for $1.2 billion and a second with American Realty Capital Properties for $1 billion.

Additionally, other large tentative settlements with a high likelihood to be finalized in 2020 include First
Solar, Inc. at $350 million, SCANA Corporation at $192.5 million, and Snap, Inc. at $187.5 million.

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The Securities Class Action Services’ Top 100 Settlements of All-Time is an annual report that identifies the largest securities class action settlements filed after the passage of the Private Securities Litigation Reform Act of 1995, ranked by the total value of the settlement fund.

Settlement Categorization

The Top 100 Report provides a wealth of information, including the settlement date, filing court, settlement fund, and identifies the key players for each settlement. The report is broken down into following categories:

Institutional Lead Plaintiff Participation

This section displays the number of cases in the Top 100 involving institutional lead plaintiffs. It also identifies the institutional investors serving as institutional lead plaintiff.

Lead Counsel Participation

This section lists the law firms that served as lead or co-lead counsel for each litigation in the Top 100 Settlements and identifies the most frequent lead or co-lead counsel in the Top 100 Settlements. Counsels with the same participation are given the same ranking. In addition, the list includes participation in cases where they were litigated under a previous name.

Claims Administration Participation

This section lists the claims administrators who handled the Top 100 Settlements and identifies the most frequent claims administrators. It includes settlements administered from old entities.

Restatements

This section identifies the cases in the Top 100 Settlements involving accounting restatements and shows the number of restatement cases versus non-restatement cases.

Top 50 SEC Disgorgements

This section provides a list of the largest SEC settlements, ranked according to the Total Settlement Amount. The Total Settlement Amount reflects the sum of disgorgement and civil penalties in settlements reached with the Securities and Exchange Commission. The Top 50 SEC Disgorgements includes only those where the distribution plan has received final approval from the SEC. Cases with the same settlement amount are given the same ranking.

Top 5 Institutional Lead Plaintiffs Participation

Institutional Lead Plaintiff | Case Name Rank Total Settlement Amount Number of Settlements
State Teachers Retirement System of Ohio $5,592,300,000 8
Bank of America Corporation 7 $2,425,000,000
American International Group, Inc. 14 $1,009,500,000
Merrill Lynch & Co., Inc. 33 $475,000,000
Global Crossing, Ltd. 38 $447,800,000
Federal Home Loan Mortgage Corp. (Freddie Mac) 40 $410,000,000
Marsh & McLennan Companies, Inc. 41 $400,000,000
Allergan, Inc. 69 $250,000,000
BP p.l.c. 94 $175,000,000
New York State Common Retirement Fund $11,368,450,714 6
WorldCom, Inc. 2 $6,194,100,714
Cendant Corp. 3 $3,319,350,000
McKesson HBOC Inc. 13 $1,052,000,000
Raytheon Company 36 $460,000,000
BP p.l.c. 94 $175,000,000
National City Corp. 100 $168,000,000
Teachers’ Retirement System of Louisiana $4,358,500,000 5
Tyco International, Ltd. 4 $3,200,000,000
Pfizer, Inc. 30 $486,000,000
Bristol-Myers Squibb Co. 55 $300,000,000
WellCare Health Plans, Inc. 85 $200,000,000
Dollar General Corp. 97 $172,500,000
Public Employees’ Retirement System of Mississippi $2,332,750,000 5
Merck & Co., Inc. 12 $1,062,000,000
Schering-Plough Corp. 35 $473,000,000
Merrill Lynch Mortgage Investors, Inc. 51 $315,000,000
J.P. Morgan Acceptance Corp. I 62 $280,000,000
The Mills Corp. 84 $202,750,000
Ohio Public Employees Retirement System $4,467,300,000 5
Bank of America Corporation 7 $2,425,000,000
American International Group, Inc. 14 $1,009,500,000
Global Crossing, Ltd. 38 $447,800,000
Federal Home Loan Mortgage Corp. (Freddie Mac) 40 $410,000,000
BP p.l.c. 94 $175,000,000

The complete publication is available here.

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