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FRT’s Fast Five: Week Ending November 13, 2020

Financial Recovery Technologies Fast Five provides you with the top news in shareholder class actions. Stay up-to-date on the latest developments in settled (U.S./Canada) claims filing opportunities, Antitrust settlements, Global Group Litigation matters and more. For more information, contact your Financial Recovery Technologies representative or email us.

1. Litigation Funding Rules on the Brink as Dissent Grows

Treasurer Josh Frydenberg is facing growing pressure to wind back rules on litigation funders as the Nationals and Labor agitate for change and One Nation leads the charge on a compromise. Nationals MPs have been quietly lobbying for amendments to the regime which came into effect on August 22, over concerns it would impede farmers’ ability to access class action litigation. Senator Perin Davey told The Australian Financial Review that while the intent of the rules was good, the Nationals were working with the government to ensure farmers were not disadvantaged. Labor is looking to go a step further and strike down the regulations with a disallowance motion in the Senate due to be voted on as early as Thursday, and several crossbenchers are likely to back Labor’s position. Click here to read the full article (subscription may be needed).

2. Funder Overturns ‘Chilling’ Decision on Underpayment Class Actions

A key roadblock to a wave of class actions for alleged underpayments has been removed after the Federal Court scrapped requirements for foreign litigation funders to first stump up millions of dollars in legal costs. UK-based litigation funder Augusta Ventures on Tuesday successfully overturned the precedent ruling that it had to pay $3.1 million in costs before it proceeded with a multimillion-dollar class action against BHP and labour firms over the alleged underpayments of casuals at Mount Arthur coal mine. The precedent was expected to spread to half a dozen other industrial relations class actions and to have a chilling effect on further litigation in the Fair Work Act’s traditionally no-costs jurisdiction. However, a full court of the Federal Court, led by Chief Justice James Allsop, held underpayment claims were distinct from “speculative” commercial class actions and that requiring their funders to pay security of costs would clash with workers’ rights and the public interest. Click here to read the full article (subscription may be needed).

3. Australia: COVID-19 Economic Crisis, Class Actions and Funded Litigation

Will we see an increase in class actions and funded litigation following the COVID-19 financial crisis similar to that following the global financial crisis? If there is an onslaught of corporate failures, including failed managed investment schemes, then such litigation seems likely to ensue. However, in the last year, Parliament and the courts have taken steps which might slow such litigious activity. For example, since 22 August 2020, there is a general obligation for operators of litigation funding schemes to hold an Australian Financial Services Licence and each litigation funding scheme must be registered. This exposes litigation funders to scrutiny by the Australian Securities and Investments Commission and requires them to act honestly, efficiently and fairly, maintain appropriate levels of resources and be competent to provide financial services under licence as well as various other obligations. In addition, a question has recently arisen as to whether the courts have power to make common fund orders. Click here to read the full article.

4. A 23-Year-Old Is Suing Australia Over Climate Risk in Bonds

The Australian government is defending a class-action lawsuit that claims it’s misleading investors by failing to disclose the impact of climate risk in its bonds. Amid a growing wave of climate litigation worldwide, 23-year-old law student Kathleen O’Donnell says the Australian Office of Financial Management and the Treasury are deceiving investors by not disclosing climate change alongside other financial risks in its exchange-traded debt. She wants all marketing halted until the disclosures are made. The lawsuit comes as debt investors globally grapple with assessing the long-term effects of rising world temperatures and how much economic growth must be sacrificed for countries to adapt. Click here to read the full article.

5. Should Companies Be Protected From Securities Litigation Arising Out of the Pandemic?

In a rulemaking petition filed by the U.S. Chamber Institute for Legal Reform and the Center for Capital Markets Competitiveness of the U.S. Chamber of Commerce, petitioners ask the SEC to take on one aspect of this type of securities litigation—event-driven securities litigation arising out of the COVID-19 pandemic. Will the SEC take action? Petitioners report that securities class actions based on the disastrous COVID-19 pandemic have already been filed, and predict that “pandemic-related events will be seized upon as the basis for additional securities litigation.” But, petitioners maintain, the SEC has the authority to address this issue: the PSLRA provides authority for the SEC “to expand the PSLRA’s statutory safe harbors and create additional exemptions from liability when appropriate. The Commission should exercise that authority and act without delay to place reasonable limits on securities litigation arising out of the COVID-19 pandemic.” Click here to read the full article.

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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.

This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and do not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.

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