U.S. class action settlements surge in 2022

While 2022 was a tough year in the markets for shareholders, U.S. securities class action settlement activity surged during the year, according to a new report from ISS Securities Class Action Services.

The firm reported that there were 141 settlements of securities class action suits in 2022, which represented US$4.77 billion in settlement value, up 36% from the previous year. The volume of settlements increased 22% year over year.

“While all major indices delivered investors negative returns in 2022, the class action landscape within the United States remained incredibly robust throughout the year,” it said, noting that the value of settlements reached its highest level since 2018.

ISS SCAS reported that 22 of last year’s settlements included allegations of inappropriate stock sales by company insiders, 18 involved alleged accounting violations, and seven of them were tied to restated financials.

The average length of litigation that was resolved in 2022 was 3.6 years from the initial filing of the case until the final court approval of a settlement, it also noted.

“Looking ahead, it appears likely that 2023 will continue to deliver meaningful shareholder recoveries,” the report said. “A few 2023 high profile settlements have already been announced and await formal court approval in the coming months.”

Additionally, investors will be able to file claims in a number of large regulatory settlements in the year ahead, it noted.

“Given the marked growth in total settlement dollars as well as count of settlements, we believe investors will have significant opportunities for recovery over the months ahead,” said Ivar Eilertsen, global head of ISS Securities Class Action Services, in a release.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.