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Number of securities class actions up 10% in 2013: Analysis

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Number of securities class actions up 10% in 2013: Analysis

The number of securities class actions filed in federal courts increased about 10% in 2013, while the value of settlements set a record, according to a survey released Tuesday.

The survey by Washington-based National Economic Research Associates Inc. found that 234 securities class actions were filed 2013 compared with 213 in 2012. This was slightly higher than the average 224 filings from 2008 through 2012, according to the report.

Meanwhile, the number of cases settled last year came close to 2012's record low, according to NERA's data. One hundred securities class actions were settled in 2013 compared with 94 in 2012. The average number of settlements per year is 127 for the period of 1996 through 2011, according to the report.

The report said that excluding certain settlements — including those of more than $1 billion, merger objection settlements and a certain type of initial public offering settlement — the average “usual” securities class action settlement reached $55 million, an increase of 53% over 2012 and a 31% increase over the previous high in 2009. The median amount for 2013 was $9.1 million, a 26% decrease compared with 2012.

“Large settlements got larger, while small settlements got smaller in 2013,” report co-author Renzo Comolli said in a statement.

“Nine securities class action settlements last year passed the $100 million mark, driving the average settlement amount to its record high. In addition, numerous small settlements occurred in 2013, substantially driving down median settlement values,” he said.

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Meanwhile, the number of merger objection cases filed in federal court continued to diminish compared with a 2010 peak, according to the report. There were 50 such cases filed in 2013, which includes merger objections alleging breach of fiduciary duty but not a violation of a securities law, according to the report.

“In spite of the diminishing number, merger objections represented the largest distinct group of filings among those depicted here,” said the report, which does not include the many more merger objection cases that were filed at the state level.

Experts have pointed out previously that virtually all mergers and acquisitions are litigated.

Copies of the report are available here.