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Class Action Securities Litigation: Be Ready to Act in 4 Steps

The landscape is complex – are you prepared to claim the funds available for you and your clients?

Class Action Securities Litigation: Be Ready to Act in 4 Steps

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“The securities litigation landscape is complex – are you prepared to quickly and efficiently claim the funds available for you and, most importantly, your clients?”
in claims in Canada

According to research by NERA, there were about 52 unresolved securities class actions in Canadian courts representing more than C$55 billion in total claims. Securities class actions represent less than half of all types of class actions lawsuits in the courts today but represent 75% of all settlements paid out to claimants.* The volume of securities litigation claims may look relatively small but the dollar amount is significant, running to billions of dollars a year.

Securities class actions rarely go to trial because the potential damages are high compared to the amount lawyers are willing to settle them for. Unlike other class action lawsuits such as medical malpractice, claimants in securities suits are thousands of shareholders who either can't be bothered to fill out the paperwork, find the paperwork too onerous or the process too confusing to claim a damage cheque for the few dollars per share owned. A few dollars per share may be small to an individual shareholder, but if an investment firm owns thousands of shares on behalf of their clients, this most certainly adds up.

The volume of Canadian securities class actions have grown dramatically since 2001, peaking after the market crash.

Class Actions Settlements by Year

Securities regulation in Canada is governed by many different legislative and regulatory bodies both federally and provincially including stock exchanges such as the TSX and self-regulatory organizations such as IIROC and MFDA. Because there are so many governing bodies involved, the process is quite complex for investment firms to stay current without assistance.

Most of the securities class actions in Canada are based on “claims of misrepresentations in an issuer’s public disclosure or its failure to make timely disclosure of material changes”. Previously it was difficult for Canadian investors to pursue class action litigation on the basis of misrepresentation or lack of timely disclosure§ . In recent years, however, there have been more litigation settlements that indicate investors do not have to prove that they relied on the public disclosure when they made their investment decision. This made it easier for investors to commence securities class actions in Canada||.

The number of securities class actions filed in 2016 was more than double the amount filed in 2015. And from 2006 to 2015, the number of US filings with parallel Canadian actions not only grew significantly#, but settled for an average of $18.8 million -- almost three times the amount of the typical settlement in domestic-only cases**.

Because of the global nature, high settlement values and complexity surrounding class action securities litigation, it is difficult for firms to keep current and ensure they are taking advantage of the opportunities on behalf of their investors. Firms now need to have more robust monitoring and execution processes in place.

Are you prepared to capture the opportunities?

Being properly prepared to handle your clients’ class action securities litigation needs will bring new assets to your business and solidify your role as a trusted partner to your clients. The increasing complexity of the landscape and scope of litigation means firms need to have more robust monitoring and execution processes in place.

A) There are more cases to identify, in more sectors and in global jurisdictions. Firms need to be able to identify and match securities class action opportunities worldwide to their clients’ holdings efficiently and accurately.

As of the end of 2016, there were 54 active securities class actions in Canada. Together, these active cases represent more than $55 billion in claims. In the same year, the US saw the greatest number of new class action lawsuits since the 2000s era with 276 cases filed, and 44 of these were filed against foreign issuers.††

B) Significant amount of funds go unclaimed from class action lawsuits that sit idle because of a lack of knowledge, preparedness and incomplete execution.


Investors often receive densely worded mailings about class action lawsuits that they assume are junk mail and don’t realize they have money on table.

Firms need to be able to help clients make informed participation decisions and file claims completely and correctly to avoid rejections or deficiencies.

Enable your firm to provide investors with clear, accurate information and communication from their trusted provider.

The total value of settlements approved by courts in the US in 2016 was more than $5.9 billion, almost double the amount approved in 2015 with the average claim $70M US. Investors, however, may not be taking full advantage of the opportunity, and failure to reclaim settlements means billions in lost dollars: from 2000-2013, over $20 billion in U.S. settlements were not reclaimed.‡‡

Be ready in 4 steps:

  1. Don’t miss out
  2. Find the solutions
  3. Make your technology efficient, safe and secure
  4. Enhance client service

1. Don't let your business, or your clients, miss out

Be confident that you will have the tools to find the opportunities for your clients and your business.

  • Increasing litigation opportunities mean that you need to continuously identify, track, and monitor litigation developments
  • As you monitor and track settlements, offer complete transparency to your investors
  • Build a process that helps you consistently and efficiently evaluate available data so you can identify current cases and notify clients of fund recoveries

2. Find the solution

Find the right partner for your firm that can support complex securities class action filing and recovery.

  • A partner will help you deal with the increasing volume and complexity of the global aspects of litigation
  • Communicating, filing and recovering funds help definitely help you improve your customer experience
  • Leveraging an experienced partner will provide you with time to focus on your core business
  • Develop a flexible process to grow with your business, and your clients’ business, as well as the global markets

3. Make your technology efficient, safe and secure

Employ a system that protects your clients’ information while allowing for a quick and efficient response.

  • Manage your data and ensure you can track and match every investment positon to identify the recovery opportunities for every security relevant to every case and investor
  • Certify data security and reliability of the process

4. Enhance client service

Better serve the full financial needs of your clients

  • Reduce the risk of a missed settlement or investor notification by working with a partner that has access to real-time notifications of upcoming actions and status reports
  • Capture the opportunities that your clients are owed and be able to provide guidance on case participation decisions
  • Ensure investors’ satisfaction by properly filing and recovering funds on all claims for which they are entitled, and tracking the status of claims
  • Ensure you obtain the proper entitlement for your clients

Let your clients feel confident that your firm is ready to act

As securities class actions become an increasing area of focus and opportunity for investors, the financial community must be able to notify investors, claim these recoveries and enable their investors to take advantage of the billions of dollars in settlements that go unclaimed each year in an effective, reliable process that is ready to execute on a moment’s notice.

“Work with a trusted provider like Broadridge to help you address your securities class action needs.”

View a full list of references for this white paper.


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