Participation in Antitrust class actions is complicated. They require an in-depth understanding of the ubiquitous nature of interest rates, how they might impact your portfolio, and how long you’ve been investing in instruments tied to these rates. While participation can be difficult, it could mean significant recovery dollars to those who are willing to pull up their sleeves.
In the world of litigation, securities class actions are a well-known mechanism. However, there is more to class action recovery than simple securities filings. Understanding the potential significance of these antitrust cases may lead to untapped opportunities (and recoveries) for Australian investors.
Antitrust actions are complex by nature, which often leads to investors saying, “it’s too difficult so why bother.” If you have come to believe that as a fiduciary, you have an obligation to participate in or monitor securities class actions for recovery purposes, antitrust actions should be no different. Antitrust cases typically settle in the hundreds of millions to billions of dollars. Due to the complex nature of these cases, fewer investors tend to file – often only about 50% of eligible participants end up filing. This means that these larger settlements are distributed to a smaller group, resulting in higher payouts to the investors that choose to file.
While it is true that the filing process for Antitrust cases is more nuanced and intricate, keep in mind that the majority of these cases are settled US actions – where settlement dollars have already recovered, and investors are only filing claims to recover their share of the proceeds. But filing these cases is challenging and interpreting all the required elements to understand the potential for eligibility is difficult, so it is incredibly important to implement systems to help manage the participation process.
Simply put, it comes down to the data elements: how far back you have to source the data (sometimes decades), how to actually query your systems for these esoteric instruments, and ultimately what pieces of information tied to the data do you need to file. This depends on the company in question to have those records preserved. The further back in time we go, the more difficult it will become to find this information. It can be an arduous process.
It has become increasingly more evident, that investments need to be made to properly manage and support cases of this type. FRT has invested in building out an internal team solely dedicated to querying, normalising, loading and filing Antitrust cases covering derivatives instruments. FRT has invested in developing our in-house team to ensure that we fully understand the scope of each Antitrust case and the specific data elements tied to filing.
It is helpful to have some real data to illustrate the potential for Australian investors when it comes to antitrust.
- FRT has filed hundreds of thousands of claims across over $7B worth of antitrust settlements in a little over four years.
- In 2020, FRT filed claims across six different and unique antitrust settlements valued at around USD $885m.
- Out of those six individual antitrust cases, FRT filed on behalf of Australian investors in five of them.
- FRT has filed thousands of antitrust claims on behalf of just three Australian clients: two industry super funds and a local asset manager.
As with securities class actions, antitrust litigation falls into the same fiduciary duty obligations for those entrusted to act in their investors’ best interests, whether that is a retail client or a member of a super fund. Just because these cases are more complicated, doesn’t mean investors should ignore them. Serious consideration should be made when it comes to either supporting these cases in-house or outsourcing to a 3rd party provider. It is important to make certain that the proper investments have been made to support these complex and significant recovery matters to ensure maximum recoveries are returned to the fund.
- Jurisdiction Risk Profiles:
SETTLED CLAIMS I PASSIVE GROUP I ANTITRUST I FUTURE CLAIMS I OPT-IN MONITORING I OPT-OUT MONITORING
Founded in 2008, Financial Recovery Technologies (FRT) is the leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability, and transparency available. For more information, go to www.frtservices.com.
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