Dismiss shareholders' concerns at your own monetary risk. That may be the primary takeaway of a new report outlining trends in shareholder class action litigation. For example, for the first time every one of the top 10 shareholder class-action settlements exceeded $1 billion. Before 2006, only three settlements had ever exceeded $1 billion. Additionally, eight of the top 10 settlements of all time were resolved in 2006 and 2007, or are ongoing, with average settlements continuing to rise.
The data come courtesy of NERA Economic Consulting's semi-annual benchmark study. Other interesting facts include:
- The average corporation faces a 6.4% probability of being the target of at least one shareholder class action lawsuit over a five-year period.
- Excluding the top 10 settlements, average settlement values more than doubled in the 2002-2007 period to $23.2 million. Including the top settlements, the average is $40.5 million.
- Median settlements reached a new high in the first half of 2007 at $9 million, a 20% increase over the 2006 median of $7.3 million.
- More than 39% of class action cases filed between 2001 and 2005 were dismissed.
- Standard filings in the first half of 2007 jumped 47% from the second half of 2006.
The report also states that investor losses appear to be the single most powerful publicly available determinant of settlements.