The Class Action Case Files
Portfolio monitoring and asset recovery of growing global securities class actions can be daunting. Broadridge can help simplify the complex.
Just the Facts
Petrofac Ltd. (LSE: PFC), once one of the leading providers of oilfield services to the international oil and gas industries found itself embroiled in a widespread bribery and corruption scandal wherein senior Petrofac Group executives engaged in elaborate schemes with foreign states and politicians in the Middle East with regards to high value contracts in the oil and gas sector.
The scandal first emerged in 2016 via a series of press reports, and ultimately resolved in October 2021, with Petrofac pleading guilty to multiple bribery related charges brought against it by the UK Serious Fraud Office. Petrofac was fined approximately £80 million, but not before its shares plummeted by more than 85% over the course of the investigation, wiping out over £1 billion of Petrofac’s market capitalization.
Several law firms and litigation funders immediately began investigating potential shareholder claims under Section 90A of the UK Financial Services and Markets Act 2000, which provides a statutory avenue for redress for shareholders of public companies listed in the UK.
With the limitations period running May 2023, institutional investors who transacted in Petrofac securities throughout this period should consider opting-in to one of the claims presented below, with special emphasis for those investors seeking to enforce shareholder values via ESG-related litigation, as the corporate governance breaches of Petrofac here were “systemic, serious and grave,” to borrow the words of Judge Deborah Taylor, who imposed the £77 penalty at the Southwark Crown Court in London.
|
Option 1 |
Option 2 |
| Relevant Period |
1 September 2005 – 31 July 2022 |
1 October 2011 – 1 October 2021 |
| Security |
PFC Ordinary Shares |
PFC Ordinary Shares |
| Exchange |
London Stock Exchange |
London Stock Exchange |
| Jurisdiction |
England & Wales |
England & Wales |
| Litigation Funder |
Woodsford Group Limited |
Bench Walk Advisors LLC |
| Counsel |
Morgan Lewis & Bockius |
Fox Williams |
| Registration Deadline |
5 May 2023 |
30 April 2023 |
Case Challenges
UK OPT-IN LITIGATION
As part of the UK’s opt-in litigation mechanism, if an investor wishes to participate in one of these actions, it must proactively join the litigation from the outset. Claimants will be required to liaise directly with a law firm and litigation funder, and the process can be longer and more involved. Further, there are multiple cases that could proceed on parallel tracks. In order to weigh their various options, claimants must understand the differences between the cases, legal theories, damage calculations, and potential outcomes. They must also understand how their trading patterns may impact their losses, which requires a detailed individual review. Finally, the various firms and funders may have different or preferable contractual terms.
ENGLISH LAW AND CLAIM FILINGS
As part of the UK’s opt-in litigation mechanism, an investor must proactively join the litigation before the case is filed in Court via a process known as “opting in.” These opt-in litigations are being pursued under the UK Financial Services and Markets Act 2000 (“FSMA”). Certain FSMA claims, such as those pursued under Section 90A, may require claimants to demonstrate “reliance” as part of their claim, and the claimant’s identity is discoverable as interested parties may access the list of claimants on petition to the court. Thus, to weigh the various options, claimants must fully understand the differences between the cases and any specific requirements for bringing a claim.
ADDITIONAL FILING COSTS
Participating in an opt-in litigation may involve additional costs and additional contractual relationships. Unlike a US class action, each potential claimant is treated separately, and each individual case has its own funding and paperwork requirements. Typically, there are fees associated with filing in these matters. Funding agreements and costs will differ depending on the case, the law firm and litigation funder.
DOCUMENTATION REQUIRED
Registration in an opt-in proceeding often requires all investors to submit supporting documentation to prove their claim in advance of settlement. Other documentation usually requested is corporate information proving legal entity status. Failure to provide adequate supporting documentation may lead to an incomplete registration. Institutions that had many relevant transactions for example, will need significant planning and clean preparation work to prove their claims and maximize recovery.
UNIQUE ELIGIBILITY
Most securities claims only provide eligibility for those financial institutions that purchased the security during the relevant period. Accordingly, longtime holders or sellers typically cannot recover. However, certain holders of Petrofac securities during the relevant period may have significant asset recovery opportunities.
OLD RELEVANT PERIOD
Most financial institutions and individuals typically keep copies of statements, broker confirmations and house data relating to their accounts for 7 years. Here, the relevant period began 12-18 years prior. Consequently, it may be difficult for potential claimants to (a) provide transaction information beyond 7 years, and (b) provide all required supporting documentation.
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