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Value of class action settlements in 2020 steady

class action

The total value of securities class action settlements last year was in line with previous years, after settlements of more than $1 billion are excluded, says a report issued Wednesday.

The total value of the 77 settlements approved by courts in 2020 doubled to $4.2 billion in 2020 because of six mega settlements of at least $100 million, according to the report issued by San Francisco-based Cornerstone Research Inc., Securities Class Action settlements, 2020 Review and Analysis.

However, when settlements of more than $1 billion are excluded, total settlement dollars declined 4% in 2020 when compared with 2019, after adjustment for inflation, the report said.

Laura E. Simmons, a Cornerstone Research senior adviser and report co-author, said in a statement, “Any disruption in settlement rates as a result of the COVID-19 pandemic appears to have been temporary, with the overall number of settlements for 2020 in line with recent years.

“It will likely be at least a couple of years before we learn whether COVID-19-related allegations have had an impact on other settlement trends.”

Among other findings, the median settlement in 2002 was $10.1 million, compared with $11.6 million in 2019, which was a 13% decline over the historically high level reported in 2019, according to the report. The median amount for the 1996-2019 period was $9 million. The numbers were adjusted for inflation.

The report said “the median settlement amount in 2019 was at a historically high level, driven primarily by a reduction in the number of small settlements.

“The reduced level of small settlements reversed in 2020, with over 30% of cases settling for amounts less than $5 million.”

The report also says that “several trends in nontraditional case allegations have been observed in case filings, including allegations related to cybersecurity, cryptocurrency, and special purpose acquisition companies.”

It said Cornerstone expects cases involving these issues will be settled in future years.

More insurance and risk management news on the coronavirus crisis here.




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