San Francisco Roundtable Recap: Sizing Up Class Action Operations in 2026

Last week, FRT hosted institutional clients and their peers in San Francisco for a frank discussion of key operational challenges shaping securities class action recovery in 2026.

Mike Lange, SVP of Worldwide Litigation, and Alli McGrath, VP of Client Success, led the session across three areas: No Claim Form (NCF) cases, SEC Fair Funds, and how investment operations teams can navigate the friction points created by these nuanced recovery opportunities.

No Claim Form Settlements

NCF cases usually arise from breach of fiduciary duty suits filed in Delaware Chancery Court. Many challenge tender offers and go-private transactions. Settled cases distribute a fixed per-share amount to eligible holders as of the relevant transaction date. The distribution formula is straightforward, yet the operations are not.

The core challenge for Depository Trust Company (DTC) members is the time elapsed between when entitlements were determined and when distributions arrive, often years later. Client rosters change, accounts close, and stock lending arrangements introduce additional complexity around entitlement. Firms with lending programs face particular exposure when share borrowers have moved on by the time a distribution lands – in some cases leaving the nominee to absorb the cost of making share lenders whole.

Moving forward, Delaware’s Senate Bill 21 raises the bar for challenging transactions and narrows the scope of shareholder record requests. This legislation could reduce the volume and frequency of NCF settlements and thus the associated operational demands. We could, in turn, see a resurgence of appraisal rights proceedings in Delaware Chancery Court.

Related: No Claim Form, No Problem: Managing Atypical Class Action Distributions

SEC Fair Funds

Fair Funds remain a significant source of investor recoveries: the SEC has approved 51 funds for a total of $3.5 billion from 2021-25. In any given year, one or two distributions rival the largest securities class action settlements in size, such as last year’s Barclays Fair Fund ($200 million). At the same time, Fair Fund administrative requirements have become more demanding. Rejection rates are rising sharply as a result. In some recent distributions, the majority of filed claims were rejected, leading to lower institutional participation.

Some of the operational friction is structural. Documentation requirements can involve transactions dating back 15 to 20 years, well outside standard record-retention windows for fund managers and service providers. In addition, requirements can vary meaningfully across administrators: what one accepts as sufficient documentation, another may reject outright. Inconsistency makes it more difficult for operations teams to build reliable, repeatable processes.

The SEC wants to maintain full accountability for government funds – ensuring every dollar is documented from distribution through receipt by a beneficial owner. In practice, meeting that goal has meant greater direct engagement between administrators and account holders, including direct payment by check rather than wire. Industry collaboration is ongoing, and the U.S. Inspector General has announced plans to review SEC Fair Fund practices this year, which could result in positive developments for investors.

Related: 5 Ways the Shareholder Class Action Market Evolved in 2025

How Operations Teams Can Respond

Across both areas, the discussion returned to a common theme: preparation and direct engagement make a clear difference.

For NCF settlements, early intelligence is often the best solution. The lifecycle of these cases, from court approvals through final distribution, creates a 12-to-20-month runway during which firms can determine exposure and eligibility. FRT recently launched an early alert system for these matters to help clients prepare well ahead of distribution, with estimated pay dates, per-share amounts, and summary reporting provided across all active matters.

With Fair Funds, reliable notification ahead of incoming distributions is increasingly essential, particularly as more funds move to a direct payment model. FRT has been actively engaged with the SEC and claims administrators to develop processes that meet the agency’s accountability standards while reducing burden on clients’ operations teams. Examples include advance notification systems for upcoming distributions and alternative client statements when historical documentation no longer exists.

Finally, participation in industry working groups remains a useful lever for driving recovery process improvements. SIFMA has groups for class actions and Fair Funds, and is forming one for Delaware breach of fiduciary duty claims. Being proactive, flexible, and advocating thoughtfully remains key, as is leaning on partners that support this work every day.

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Thank you to everyone who joined us in San Francisco. To connect with a member of the FRT team or share a potential topic for a future roundtable, please reach out to your FRT representative or email learnmore@frtservices.com.