[ON-DEMAND] Understanding Shareholder Loss Estimates in Non-U.S. Securities Litigation

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FRT Admin
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May 12, 2020

 

“Outside of the U.S., investors deciding to register should appreciate that there is no one ‘right’ loss number. Loss estimates may be educated guesses and can help inform your organizer selection. But don’t assume a higher estimate means you’ll get more recoveries with that organizer. In the end, everyone is before the same judge with the same approach applied to measure their losses, or negotiating with the same defendant who is applying the same method to value claims for settlement.”
– Mike Lange, Senior Vice President of Worldwide Litigation

Did you miss our April webinar on ‘Understanding Shareholder Loss Estimates in Non-U.S. Jurisdictions?’ We’ve summarized some key takeaways from this 30-minute webinar. You can access the on-demand replay.

U.S. Settled Class Actions: Recognized Loss

  • Your recognized loss, or per-share damages, is represented by the difference between inflation at purchase and inflation at sale lines.
  • You don’t usually get this full Recognized Loss amount returned to you. You get a portion of it back, pro-rated by a factor equivalent to the net settlement amount available divided by the total class-wide recognized loss.

Antitrust Settlements: Transaction Volume

  • Unlike traditional securities cases, your portion of the settlement fund is based not directly on a measure of damages. It’s based on an adjusted summation of your transaction volume during the class period.

Non-US Jurisdictions – Australia and Japan

  • In Australia and Japan, a history of court or settlement guidance as well as some statutory guidance, has led to more standardized processes.
  • Australia employees an inflationary damages approach. Unlike the United States, damages numbers provided for Australian class actions are typically still an estimate. In the US recognized loss is estimated at the end of the class action after a settlement has been preliminarily approved by the court. In Australia, damages are typically run for the first time, right after the fraud occurs to provide a “class size” estimate to funders who will pay legal costs for the class during the pendency of the action.
  • In Japan, investors can recover actual losses caused by the defendants’ false statements or illicit acts under both the Financial Instruments & Exchange Act (FIEA) and the Japanese Civil Code (JCC). For primary market purchasers, the presumed amount of their losses is calculated as the purchase amount paid minus the amount realized upon sale or the market value of shares still held at the time of claim filing.

Non-US Jurisdictions

  • Outside of the US, Australia, and Japan, investors need to opt-in to litigation. Claims are brought by groups of investors and not on a representative basis as in the US.
  • There’s little legal precedent or past settlements to guide loss estimates. Lawyers and funders use different methods and as a result, investors can get significantly different estimates from different organizers in the same case.
  • Even when organizers use the same method, their inputs can differ – they may choose different time periods, disclosure dates, price drops – which will yield different loss estimates.

Learn More

To learn more about how FRT can help your firm maximize recoveries in shareholder class action settlements, contact us at learnmore@frtservices.com.

About FRT

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.

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.

 

ABOUT FINANCIAL RECOVERY TECHNOLOGIES
SETTLED  I  NON-US GLOBAL OPT-IN  I  ANTITRUST  I  GLOBAL PASSIVE  I  DIRECT OPT-OUT  I  BUYOUTS

Founded in 2008, Financial Recovery Technologies (FRT) is a 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 does 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.