2006: A Year of Multi-Billion-Dollar Shareholder Settlements
Other key findings of the NERA study include:
- 36%: Projected decline in shareholder class action filings in 2006, despite some 22 lawsuits in 2006 over the issue of options backdating.
- 135: Expected total number of federal shareholder class actions in 2006, compared to 211 filings in 2005.
- 8%: Probability of the average corporation being the target of at least one shareholder class suit over a five-year period
- 38%: Percentage dismissed class action cases that were filed between 1999 and 2004.
- Seven of the ten largest settlements occurred between 2005 and 2006. Enron's $7.1 billion partial settlement exceeds last year's record-setting $6.2 billion WorldCom settlement, which dwarfed the mammoth $3.6 billion Cendant settlement in 2000.
- More than 10% of shareholder class action settlements were "mega-settlements" of over $100 million, in contrast with an average of 3% reaching this threshold in prior years.
- Median settlements continued to rise in 2006, hitting a new peak of $7.3 million.
- Settlements increase by approximately one-third if an IPO is involved.