Trends in Canadian Securities Actions

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A report by Cornerstone Research found that the number of securities class actions filed in the U.S. last year ticked up slightly. Yet that number remains below historical averages. In contrast, the number of securities cases filed in Canada last year equaled the prior year and exceeded the average over the last ten year, according to a new report by NERA Economic Consulting. Trends in Canadian Securities Class Actions: 2013 Update (here).

In 2013 there were 10 new securities actions filed in Canada. That is the same number filed in the prior year. While it is below the high of 15 filed in 2011 (NERA statistics go back to 1997), it exceeds the average of about 8 cases filed per year over the last decade.

Nine of the ten actions brought last year were Bill 198 cases. Those are actions tie to secondary market civil liability based on provincial securities act provisions that have come into force since 2005. Nine of the Canadian domiciled companies against whom actions were filed last year were also subject to a U.S. securities class action. At the same time, four Canadian companies were subject to a U.S. securities suit but were not named in a Canadian filing.

Since 1997 over half of the Canadian suits filed focused on the finance, non-energy metals and energy minerals sectors. Specifically, over 24% of the actions centered on finance, over 21% on non-energy minerals and about 8% on energy minerals. In contrast, only 3.6% centered on health technology while 4.5% concerned electronic technology.

In 2013 six Canadian securities cases settled for an aggregate of $52 million. The largest settlement was with SMART Technologies, Inc. for $15.25 million. The second and third largest were with, respectively, Amtec infrastructure Inc. for $12.9 million and Zungui Haixi Corporation for $10.85 million. Those numbers should be viewed in the context of the median settlement amount since 1997 of $12.7 million and the average over the same period of $89.5. The latter number is skewed by two large settlements with Nortel Networks Corp. Overall the number of settlements in 2013 was twice that in 2012 and the most since 2009.

Finally the number of pending securities cases in Canada continues to climb. At the end of 2013 there were 54 pending cases. That compares to 51 in 2012, 46 in 2011, 35 in 2010 and 28 in 2009.