Securities class action pace slows

CANADIAN FIGURES

DREW HASSELBACK Securities class actions may be hitting a lull, according to data analyzed by NERA Economics Consulting.

The number of securities class actions filed in 2016 was more than double the amount filed in 2015, but lagged the pace of filings between 2010 and 2014.

“While some observers once anticipated that Canada would become a preferred venue for shareholder class actions, the last two years may indicate otherwise,” conclude study authors Bradley Hays and Robert Patton in a 24-page report to be issued Wednesday. “One possible interpretation of the trend observed in Canada over the past two years is that a slower pace of filings is the new norm.”

Nine new securities class action cases were filed in Canada last year, up from four in 2015. But even with last year’s jump, the number of cases was well behind the trend established at the start of the decade. In 2010, 12 cases were filed, followed by a record 15 cases in 2011, then 10 cases in 2012, 11 in 2013 and 13 in 2014.

“Both 2015 and 2016 were below the levels observed over the preceding five years,” Hays and Patton write. “This is in stark contrast with the U.S., where securities class actions filings have increased in each of the last four years.”

Since Ontario created a statutory remedy for secondary market misrepresentation in 2005, some 76 cases have been filed. Of those, 34 remain unresolved, though two of those have resulted in partial settlements. Of the remaining cases, 11 were either dismissed or discontinued, while 33 resulted in settlements, including the two partial ones.

Just two matters were resolved in Canada last year, down from seven the year before and the lowest since 2011.

There was a $53-million settlement in a cross-border case involving Penn West Petroleum. The other was a $400,000 settlement in a case called RB Energy Inc., formerly known as Canada Lithium Corp. The settlement was paid directly to counsel.