On June 28th, Financial Recovery Technologies’ CEO Rob Adler virtually “sat down” with Jeremy Hill, Group General Counsel at Universities Superannuation Scheme Ltd to discuss a number of topics in the securities litigation space, including USS’ history of managing shareholder litigation and evolution of their shareholder litigation policy, the USS Class Actions governance program, and exploring the Petrobras case and USS’ role as lead plaintiff.
What are some of the major takeaways you learned from working with Petrobras?
When working with a law firm on Petrobras, for example, we approached it the same as we do any external counsel, working very close to the law firm. One of the major things we learned from the experience is that managing the internal board is a huge, important part of the process.
Petrobras was in the media quite a bit and was quite notable due to their peers. A lot of participants from the asset owner/manager side conducted their own individual cases, resulting in a lot of opt-out activity pre-settlement.
At one point in the process, the number of opt-out participants was getting quite large, which was definitely a concern although quite common when dealing with a company of Petrobras’ size. At USS, we were always committed to doing the best for the class. This case certainly heightened our sense of fiduciary duty, while we were supported in some way by the different opt-outs weakening Petrobras’ resolve.
How do you view opt-in and opt-out options?
In regards to opting-out of a case, we are certainly seeing a lot of activity in the US or other passive jurisdictions. This is particularly true as investors get more confident.
Looking at opting-in to cases in other jurisdictions, the criteria is really quite jurisdiction-specific for us at USS. We look at a few major factors, including:
- Quality and size of claim – Is the case legitimate? Who else is involved? How big is the claim?
- Jurisdiction Risks – Rank different jurisdictions based on what we proceed are their legal system risks, as well as taking a look at the complications of the process itself
- Low, medium and high risk jurisdictions
Where do you see the industry moving in the next ten years?
There are a few important components that will play a factor in the industry’s progression in the next ten years. First, is the increasing Importance of shareholders holding management accountable. Bad corporate behavior will be held to a higher standard by the investing community. Secondly, the concept of duty of care will respond to issues such as climate change. In these cases, USS will look to position itself as the plaintiff rather than the defense, fulfilling our role in litigating climate change above all else. Finally, elements like ESG and responsible investing open up potential opportunities as we move forward.
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