Securities Class Actions Outside US to Rise $8.3 Billion Per Year By 2020, Says Study

Settlements in securities class actions outside the U.S. will rise to $8.3 billion per year by 2020, according to a new forecast study from GOAL Group, a class action services specialist. The study also predicts that if non-participation rates seen in U.S. class actions are experienced in non-U.S. activity, by the end of the decade $2.02 billion of investors’ rightful returns will be left unclaimed each year.

Furthermore, the report warns that because non-U.S. legislatures require participants to register at the beginning of a case, investors need to actively participate to receive their rightful returns. Since fiduciaries such as fund managers and custodians may be sued if they do not ensure investors participate in class actions, and since non-participation rates are likely to be at least at current U.S. levels, evidence is already emerging that funds are now including the responsibility for class action identification and participation in contractual agreements with their custodians.

Stephen Everard, CEO of GOAL Group, comments: “Until recently, the main focus of securities class actions was on the U.S. as the most developed legislature in this respect. However, class action growth outside the U.S. is now increasing rapidly, and is predicted to mirror the growth of the U.S. class action scene in the early part of the 21st century.

“The root of this international diversification seems to have been a combination of restrictions on jurisdiction definitions in the U.S. Federal courts, along with a growing desire to develop domestic class action procedures in many countries around the globe.

“Moreover, certain legislatures — currently The Netherlands and Canada — have defined and admitted the idea of a global ‘class’ where non-U.S. investors in shares listed on a non-U.S. exchange can pursue their securities class actions in those countries’ courts. There is no viable excuse for non-participation as a number of specialist service providers can now perform this function at relatively low cost.”