Archive for December, 2008

Securities class action trends 2008

Saturday, December 20th, 2008

This week two reports were published, by NERA Economic Consulting and RiskMetrics Group, both covering securities class action litigation trends of the past year. NERA’s 2008 Trends in Securities Class Actions (report, press release) is its annual year-end study of US case filings and settlements. Securities Docket has a short overview of the report’s findings and additional details on the study from the two primary authors.

RiskMetrics’ Globalization in Securities Class Actions (registration required), authored by Adam T. Savett also of Securities Litigation Watch, is an update to last year’s paper Accountability Goes Global. It ‘explores recent trends in non-US investor interest in US Securities Class Actions.’ For instance, it finds that from 1996 through 2007 there were ‘234 different instances of an international [non-US] institutional investor seeking to serve as a lead plaintiff in a US securities class action’, in 134 different cases. And that ‘[i]n every year since 2002, international institutional investors have filed lead plaintiff motions in more than 5% of all new federal securities class actions.’

One thing you, regular WV&Z readers, are surely familiar with is the report’s latest reason explaining ‘the continued trend’ of non-US investor interest in US securities class actions: ‘The increasing availability and acceptance of securities litigation in non-US jurisdictions.’

Sweden evaluates Group Proceedings Act

Friday, December 19th, 2008

Earlier this week I came across a 2006 article by Shook Hardy & Bacon LLP’s Laurel J. Harbour and Marc E. Shelley, entitled The Emerging European Class Action: Expanding Multi-Party Litigation To A Shrinking World. Among other things, the Swedish collective action legislation (Lag om grupprättegång, Group Proceedings Act) is discussed therein (from p.5). (Also see this 2006 intervention by (then-)Deputy Consumer Ombudsman Marianne Åbyhammar of Konsumentverket, the Swedish Consumer Agency.)

That discussion ended with the note that ‘[t]he Swedish Act is to be reviewed at the end of 2006 or beginning of 2007.’ So I e-mailed the authors with the question if that review indeed took place and if so what the outcome was. After exchanges with both, I invited Marc to amend slightly his initial comprehensive response for publication as a guest post. He kindly accepted the invite. With thanks, his guest post is as follows:

In October 2008, the committee to evaluate Sweden’s Group Proceedings Act (SFS 2002:599) released its nearly 300 page report and recommendations (in Swedish; summary, in English). When the Act was adopted in 2002, the law provided for an evaluation after five years. In June 2007, the Ministry of Justice appointed the committee to analyze the cases filed since the law went into effect on January 1, 2003 (for the interest of the readers of With Vigour and Zeal, to my knowledge, none has been filed yet based on alleged misconduct related to securities).

By way of background, the Act requires cases to satisfy several preconditions in order to proceed. Like the U.S. Rule 23, a class action may be brought by an individual or association seeking monetary or injunctive relief on virtually any type of claim. There must be common factual circumstances, and the action must be manageable and a superior way of handling the litigation compared with the alternatives of joinder and test cases. The class must be “appropriately defined” and the plaintiff must suitably represent the class. However, in contrast to Rule 23, class members must opt in to be included as a member of the class and only individuals who have done so will be bound by the judgment.

The committee concluded after surveying the cases filed since 2003 that there has been no abuse of the device and, on the contrary, it has had a positive effect on access to justice for consumers. Despite the lack of abuse and its apparent success, the committee proposes to expand the procedural law in the following way:

  1. Introducing U.S. style contingency fees of up to 30% of the disputed amount, in order to facilitate the financing for the plaintiffs to bring more class actions. The committee’s report specifically cites to the 2006 German Supreme Court decision that a bar on contingency agreements is unconstitutional. The report also proposes an increase of legal aid for class actions.
  2. Allowing plaintiffs to provide notice to class members instead of the court to improve the notification process for greater participation.
  3. Expediting the court’s certification process, particularly with respect to the class definition, to make the device quicker and more effective.
  4. Preserving the opt-in model, despite calls for changing to an opt-out model (either generally or for certain types of claims, as permitted in the Norwegian and Danish class action models).

It is not yet clear whether these proposals will be successful. Interested parties have until January 16, 2009, to submit comments.

Fortis SA/NV subject of enquiries

Monday, December 1st, 2008

The Enterprise Chambers of the Amsterdam Court of Appeals and of the Courts of Brussels both declined to enjoin the transactions that, among other things, saw Fortis SA/NV partially sold off to BNP Paribas. (previous post) The Brussels court issued its decision on 18 November, the Amsterdam court a week later on the 24th. (Amsterdam summary, decision, in Dutch; Brussels, decision in French and see, in Dutch) Plaintiffs’ counsel in the Dutch case is Spigthoff Advocaten & Belastingadviseurs NV.

Both courts though decided to instigate an inquiry (enquêteonderzoek), into the policy of Fortis, the course of events from 27 May 2007 and the transactions that occurred between 26 September 2008 until 7 October 2008, inclusive (Amsterdam) and into the valuation of the shares (Brussels), respectively. Modrikamen, counsel for the plaintiffs in the Belgian case, has stated it will appeal the decision.

In New York, so far at least one action (case detail, complaint dated 22 October 2008) has been filed against Fortis. The proposed class period is between 28 January 2008 and 6 October 2008, inclusive. Plaintiff’s counsel is Wolf Haldenstein Adler Freeman & Herz LLP. If you want to move for Lead Plaintiff status in that case, you must do so no later than 22 December 2008. Scott+Scott LLP has Fortis listed in its ‘Case investigations’ section for the present (here).