NERA Economic Consulting has released a study entitled “Recent Trends In Shareholder Class Action Litigation: Beyond the Mega-Settlements, is Stabilization Ahead?” The study reaches the following notable conclusions:
(1) The average settlement value hit a new high in 2005 (even excluding WorldCom and Enron) of $24.3 million. Nevertheless, NERA believes that “average settlements will not rise further over the next two or three years and, instead, could even fall” given that most of the cases associated with the stock market crash of 2000-2002 have been resolved.
(2) The study examines various factors that can raise settlement values – e.g., presence of accounting allegations (+20%), related official investigation (+25%), and lead plaintiff is an institutional investor (+33%).
(3) There were 209 filings in 2005. Although this is the lowest number since 1997, most of the difference is due to a sharp fall in filings in the 9th Circuit and “it is far too early to conclude there is a downward trend.”