Posts Tagged ‘Elaine Buckberg’

Recent Trends in US Securities Class Actions against Non-US Companies

Posted by Elaine Buckberg, NERA Economic Consulting, on Tuesday November 20, 2012 at 8:54 am
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Editor’s Note: Elaine Buckberg is Senior Vice President at NERA Economic Consulting. This post is based on a NERA publication by Robert Patton; the full publication, including footnotes, is available here.

The volume of US securities class action litigation targeting companies outside the US has recently reached record levels, despite a 2010 decision by the US Supreme Court, in Morrison v. National Australia Bank, which substantially restricted the extraterritorial reach of many such cases. This increase is attributable in large part to a wave of suits filed against Chinese companies listed on US stock markets. Even excluding Chinesecompany litigation, however, the pace of US securities class actions against non-US companies has not fallen below the levels observed prior to the Morrison decision.

On the other hand, Morrison may have had some effect on settlement sizes. In the past several years, there have been few very large settlements in US securities class actions against non-US companies, a development that, as discussed below, may be attributable in part to the decision. This article surveys recent trends in filings of US securities class actions against non-US company defendants, drawing upon data up to mid-2012. It also discusses trends in settlements, and concludes by reviewing the outlook for such litigation going forward.

…continue reading: Recent Trends in US Securities Class Actions against Non-US Companies

Do Courts Count Cammer Factors?

Posted by Elaine Buckberg, NERA Economic Consulting, on Thursday August 23, 2012 at 9:00 am
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Editor’s Note: Elaine Buckberg is Senior Vice President at NERA Economic Consulting. This post is based on a NERA publication by Dr. David Tabak, available here.

One of the key stages in many securities class actions is class certification. The most common path for plaintiffs to obtain certification includes showing that the market in which the securities at issue traded was efficient, leading to what, in 1988, the Supreme Court in Basic v. Levinson termed a “rebuttable presumption” of reliance common to all class members.

The following year, the court in Cammer v. Bloom listed five factors that would help establish that a security traded in an efficient market. Since then, dozens of courts have relied on these “Cammer factors” in evaluating market efficiency. The rulings do not state, however, how the court reached an overall opinion on market efficiency when different factors point in different directions. To help shed light on this issue, we have examined identifiable cases from 2002 through 2011 in which a court ruled on market efficiency after reviewing some or all of the Cammer factors.

Our review of the data yields a perhaps remarkable conclusion: in over 98 percent of the cases, the ultimate ruling on efficiency can be predicted by the number of factors that the court found favored efficiency less the number of factors that the court said argued against efficiency. When this figure was positive, the court found the security at issue to have traded in an efficient market in all but one instance, while when the figure was zero, the court always found the security to have traded in an inefficient market. Moreover, just limiting the analysis to a review of three Cammer factors (turnover, analysts, and market makers) yields similar results.

…continue reading: Do Courts Count Cammer Factors?

SEC Settlement Trends

Posted by Elaine Buckberg, NERA Economic Consulting, on Sunday July 15, 2012 at 10:32 am
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Editor’s Note: Elaine Buckberg is Senior Vice President at NERA Economic Consulting. This post is based on a NERA publication by Ms. Buckberg and James A. Overdahl; the full publication (including charts and footnotes) is available here.

Trends in the Number of Settlements

The SEC’s promise to hold more individuals accountable was realized in 1H12 in a 20% jump in the number of SEC settlements with individuals. The SEC settled 286 cases with individuals in the first half of this year, putting it on pace for 572 settlements in FY12, which would be the most since 2005. This marks a shift from the end of fiscal 2011, when we reported that the SEC’s promise to hold more individuals accountable was borne out in the value, but not in the number, of settlements with individuals.

Total SEC settlements are also up, but the increase is entirely explained by the rise in settlements with individuals. The SEC settled with 379 defendants in 1H12, putting it on pace for 758 settlements in FY12. This would constitute a 13% increase from the SEC’s 670 settlements in 2011 and would constitute the most annual settlements since 2005. The pace of settlements with companies is down slightly, with 93 settlements, consistent with an annual pace of 186, as compared with 196 in FY11.

The increase in individual settlements is driven primarily by allegations relating to insider trading. The increase from 63 insider trading settlements in FY11 to an annualized number of 120 projected for FY12 accounts for over half of the observed increase in settlements in 2012. The SEC also increased its settlement activity with individuals in matters relating to Ponzi schemes. Settlements with individuals relating to public company misstatements rose to an annualized pace of 78 settlements, up from a low of 60 in 2011, but still well below the 91 settlements in 2010.

…continue reading: SEC Settlement Trends

Cross Border Shareholder Class Actions Before and After Morrison

Posted by Elaine Buckberg, NERA Economic Consulting, on Saturday February 11, 2012 at 8:49 am
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Editor’s Note: Elaine Buckberg is Senior Vice President at NERA Economic Consulting. This post is based on a NERA publication by Ms. Buckberg and Max Gulker; the full publication is available here.

In our paper, Cross Border Shareholder Class Actions Before and After Morrison, we conduct an empirical inquiry into the effect of the Supreme Court’s 2010 decision in Morrison v. National Australia Bank on the competitiveness of US markets as a venue for listings by foreign issuers and trading in cross-listed stocks. Passed in the wake of Morrison, the Dodd-Frank Act requires that the SEC inform Congress about the merits of creating a new extraterritorial private right of action. We provide input into the debate by using data on 329 shareholder class actions filed against foreign companies and discussing the effects of such a right on the competitiveness of U.S. capital markets.

We conclude that foreign companies’ expected litigation costs should fall after Morrison, because investors who purchased their shares on overseas exchanges will be excluded from classes. By reducing expected litigation costs, Morrison eases a deterrent to US listing by foreign issuers and thereby makes the US a more competitive venue for cross-listings, as well as for the volume in the cross-listed stocks. We submitted our paper to the SEC as part of its public comment process, and have posted it on SSRN.

…continue reading: Cross Border Shareholder Class Actions Before and After Morrison

SEC Settlements with Companies Soar in 2011

Posted by Elaine Buckberg, NERA Economic Consulting, on Wednesday August 3, 2011 at 9:27 am
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Editor’s Note: Elaine Buckberg is Senior Vice President at NERA Economic Consulting.

In our recent report, SEC Settlements Trends: 1H 2011 Update, my co-authors (Jan Larsen and James Overdahl) and I document that the SEC settled with 344 defendants in the first half of its 2011 fiscal year (“1H11”), putting the agency on pace to settle with 688 defendants for the full year, in line with the 681 settlements in FY10. This stability in overall settlements, however, contrasts with a substantial shift in their composition. The number of company settlements rose by 43% to 114, an annual pace of 228, compared with 160 for the entire 2010 fiscal year. As a result, company settlements made up 33% of 1H11 settlements. Individual settlements declined 12% to 230, an annual pace of 460, compared with 521 in FY10.

However, individual accountability remained an important theme in 1H11. Indeed, four of the 10 largest settlements in 1H11 were with individuals, including the $310 million default judgment entered against Milowe Allen Brost and Gary Allen Sorenson, which also rates as the ninth-largest SEC settlement since the passage of the Sarbanes-Oxley Act (“SOX”). Other individual defendants settling with the SEC in 1H11 included Jacob “Kobi” Alexander, former CEO of Comverse Technology, and Joseph P. Nacchio, former CEO of Qwest Communications.

…continue reading: SEC Settlements with Companies Soar in 2011

 
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