Template: Building a Shareholder Litigation Governance Policy
The landscape for global shareholder recoveries has become more complex in recent years, with opportunities cropping up in as many as 40 countries annually. Monitoring these venues and making informed participation decisions remains a challenge, with varying laws and procedures imposing a range of requirements on investors.
As a fiduciary, your funds should be positioned to capture eligible recoveries whenever they are materially harmed by fraud. Yet there’s also a need to allocate internal resources wisely — maximizing recoveries while following sound governance practices that minimize the risk, and the effort, involved.
Addressing these challenges starts with developing standard procedures for managing your shareholder recovery program. To that end, FRT’s in-house legal team has created a foundational template to help our clients craft a governance policy tailored to their firm’s risk tolerance and corporate objectives.
By establishing a clear recovery program framework, investors can define:
- Appropriate risk and loss thresholds used to steer participation decisions
- Who makes participation decisions for their funds and which factors they will consider
- How decisions are tracked and documented for future reference
FRT is now making these insights available to prospective clients, who can download the template using the form below.
A Clear Participation Calculus
When global recovery opportunities arise, FRT clients receive recommended loss thresholds informed by the participation risks and burdens of a given jurisdiction. While these vary, venues fall into two general categories:
- Passive jurisdictions allow investors to “sit on the sidelines” until a settlement or judgment occurs, at which point they advance their claims in what is largely an administrative process. These include the United States, Canada, Australia, and Dutch Collective settlements in the Netherlands, among other types of actions.
- Active jurisdictions require investors to participate directly as litigants, and their claims will often be pursued by a group complaint. Major venues include Japan, the United Kingdom, and several other European countries.
Our team recommends that investors prioritize “low-hanging fruit” opportunities likely to resolve short of full litigation, as these carry the fewest participation burdens and the highest potential upside. Working with an outside vendor can help your firm identify relevant opportunities and make participation decisions more efficiently.