In a recent webinar, FRT’s securities litigation counsel, Mike Lange, discussed the changing global landscape for investment recovery actions, with a particular focus on Europe. He described the risk categories of actions in different countries and shared thoughts on how the landscape for investment recovery in Europe is likely to evolve. Highlights include:
- Globally, there is a significant rise in the number of companies being sued for investment recovery. There are more matters, more organizers and funders entering the market, and more competition for investor registrations.
- Outside of North America, filings in Australia and Taiwan dominate. Excluding the U.S. and Canada, over the past three and a half years more than 70% of global filings have come from Australia and Taiwan. The process in Australia is similar to the U.S.; Taiwan uses class actions but has limited participation by institutions and limited eligibility among FRT clients.
- The trends in Europe are similar but the pace is slower. As elsewhere, in Europe, there are more companies getting sued, more funders entering the market, and increased competition for investor registrations. In particular, Germany and the Netherlands are seeing increased filings, as is the UK.
- In deciding whether to participate in filings, investors should understand the risks of different jurisdictions. Europe remains a patchwork of countries with different laws, rules, and ways of dealing with cases. To decide whether to participate in actions, investors must understand the risks associated with different jurisdictions.
Jurisdictions can be classified as passive or active.
- Passive. A passive jurisdiction has no risk of adverse party cost shifting (loser pays), no disclosure of who passive participants are, and participants are not required to provide any information during discovery. Australia is a passive jurisdiction.
- Active. Active jurisdictions have different levels of risk in pursuing investment recovery, based on risks such as incurring costs, being compelled to participate in discovery, and losing anonymity. Countries can be viewed as low risk (Japan), medium risk (Germany), and high risk (UK). Most European countries are medium risk.
A country’s risk level impacts an investor’s decision on whether to participate in a filing. An investor is likely to participate in any filing in a passive jurisdiction, as there is no downside. But in active jurisdictions, most investors have a “loss threshold” that must be passed before participating.
- Overall, Europe shows signs of becoming more passive. Currently, most non-US/Canada matters outside of Europe are already passive. And, looking forward, Europe may become more passive. Support for this belief comes from Dutch Collective Settlements, from the German KapMug process, from the UK Competition Appeal Tribunal, and from the EU’s “New Deal for Consumers.” These indicators all point toward a more passive environment taking hold in Europe.
In addition to providing more data and details on each of these topics, in this webinar Lange also:
- Provided a framework investors can use in choosing which European matters to participate in and which organizers to work with.
- Described non-litigation means investors are using to change governance and corporate behavior.
- Offered observations on other European trends, including multi-country recovery efforts and claim assignments.
For insights into the shifting landscape for investment recovery in Europe and around the globe, check out the webinar replay. You will gain a better understanding of what is happening related to investment recovery in Europe and what it means for you.
>> VIEW THE REPLAY HERE. <<
For more details on non-U.S. shareholder litigation monitoring and recovery opportunities, please contact your FRT representative or email us at email@example.com.
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