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Total Settlement Dollars & Settlement Size in 2019 Class Action: An Excerpt from Securities Class Action Settlements—2019 Review and Analysis

The total value of settlements approved by courts in 2019 declined dramatically from 2018 due to the absence of very large settlements. Excluding 2018 settlements over $1 billion, however, total settlement dollars declined by a modest 3 percent in 2019 (adjusted for inflation).

The median settlement amount in 2019 of $11.5 million was unchanged from the prior year (adjusted for inflation).

Compared to the prior nine years, larger median settlement amounts in 2019 were accompanied by higher levels in the proxy for plaintiff-style damages. (See page 5 for a discussion of damages estimates.)

  • The median settlement amount in 2019 was 34 percent higher than the prior nine-year median.

Mediators continue to play a central role in the resolution of securities class action settlements. In 2019, nearly all cases in the sample involved a mediator.

Settlement Dollars
Total Settlement Dollars 2010-2019

As discussed above, the median settlement amount was unchanged from 2018. Generally, the median is more stable from year to year than the average, since the average can be affected by the presence of even a small number of large settlements.

The average settlement amount in 2019 was $27.4 million, 43 percent lower than the average over the prior nine years. (See Appendix 1 for an analysis of settlements by percentiles.)

If settlements exceeding $1 billion are excluded from the prior nine-year average, the decline in 2019 was 16 percent.

There were four mega settlements (equal to or greater than $100 million) in 2019, with settlements ranging from $110 million to $389.6 million. (See Appendix 4 for additional information on mega settlements.)                      

Despite a decline in the average settlement amount from 2018, the number of small settlements (less than $5 million) also declined by 36 percent to 16 cases in 2019, the fewest such settlements in the past decade. Cases that result in settlement funds less than $5 million may be viewed as “nuisance” suits, a shift upwards from a threshold of $2 million prevalent in early post–Reform Act years. 

57 percent of cases settled for between $5 million and $25 million.

Total Settlement Dollars 2010–2019 (Dollars in billions)

Median Settlement size
Note: Settlement dollars are adjusted for inflation; 2019 dollar equivalent figures are used.
N refers to the number of observations.

 

Read a summary of the Cornerstone Research Report Securities Class Action Settlements-2019 Review and Analysis.

Read Cornerstone Research report Securities Class Action Settlements—2019 Review and Analysis.  

 

Copyright ©2020 Cornerstone Research

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About this Author

Laura E. Simmons, CPA, Certified Public Accountant, Finance Consulting, Cornerstone Research
Senior Advisor

Laura Simmons is a certified public accountant (CPA) and has more than twenty years of experience in accounting practice and economic and financial consulting. She has focused on damages and liability issues in litigation involving securities and the Employee Retirement Income Security Act, as well as on accounting issues arising in a variety of complex commercial litigation matters. She has served as a testifying expert in cases involving accounting analyses, securities case damages, and research on securities lawsuits.

Dr. Simmons’s research...

202-912-8998
Laarni Bulan Financial & Securities Cornerstone Research
Principal

Laarni Bulan specializes in the area of finance, consulting on cases related to financial institutions, securities, market microstructure, company valuation, insider trading, and real estate markets. Dr. Bulan leads large case teams on complex government investigations, regulatory matters, securities class actions, and white collar litigation. She works closely with experts in preparation for deposition and trial.

Specifically, her case experience includes:

  • Analysis of the liquidity and capital position of large financial institutions during the credit crisis
  • Examination of the underwriting and monitoring practices, and the performance of asset-backed commercial paper conduits during the financial crisis
  • Analysis of liquidity in the municipal bond market during the financial crisis
  • Examination of allegations of market and benchmark manipulation and collusive behavior in the markets for credit default swaps and foreign exchange
  • Analysis of a broker-dealer’s alleged improper trade clearing and settlement procedures
  • Merger transaction valuations, including valuations of a large financial institution and a high-technology firm
  • Analysis of the materiality of nonpublic information and alleged insider trading violations of corporate executive defendants
  • Analysis of the impact of the financial crisis on real estate markets and investments

Research

Dr. Bulan has published numerous articles in peer-reviewed journals. Her research covers dividend policy, capital structure, executive compensation, corporate governance, and real options. Her authored or coauthored articles include:

  • “The Impact of Technical Defaults on Dividend Policy” in the Journal of Banking and Finance
  • “On the Timing of Dividend Initiations” in Financial Management
  • “A Few Bad Apples: An Analysis of CEO Performance Pay and Firm Productivity” in the Journal of Economics and Business
  • “Incentivizing Managers to Build Innovative Firms” in the Annals of Finance
  • “Irreversible Investment, Real Options and Competition: Evidence from Real Estate Development” in the Journal of Urban Economics
  • “Regulatory Risk, Market Uncertainties, and Firm Financing Choices: Evidence from U.S. Electricity Market Restructuring” in the Quarterly Review of Economics and Finance

Prior to joining Cornerstone Research, Dr. Bulan had a joint appointment at Brandeis University as an assistant professor of finance in their International Business School and in the economics department.

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