The Australian Securities Class Action Landscape: Life without Common Fund Orders

The Australia High Court’s recent decision eliminating the power of lower courts to make common fund orders has proponents on both sides of the class action debate making dire predictions. Case organisers (law firms and funders) portend a return to earlier days when class actions were regularly filed on a closed (opt-in) class basis and are pressing investors to quickly register in their new matters or risk being shut out. On the other side, critics decry the probable legalisation of attorney contingency fees and predict a scourge of baseless suits in its wake.

The reality isn’t so dire. For now, we won’t see common fund orders. However, judges don’t like losing case management tools so alternatives may be found in other laws or court rules. Courts can still enter equalisation orders after recoveries are achieved. Lawmakers may pass legislation restoring common fund orders. Time will tell. In the meantime, in Victoria, we may see legislation in March permitting lawyers to represent clients on a contingent basis, minimising or eliminating the need for third party funding in its current form.

Stripped of the rhetoric, here’s what institutional investors will likely see in the short and long terms.

NEAR TERM
We’re seeing several trends. Courts are not disturbing common fund orders already in place. For filed cases that do not have common fund orders, and for new matters, organisers are putting greater emphasis on book-building to ensure enough investor interest for economic viability. As a result, they’re pressing institutions to register early. Some new class actions are planned on a closed basis. Others will be filed open, particularly if the funder has sufficient investor interest committed early to make the case financially viable or close to it.

For closed classes, while nothing is guaranteed, counsels are generally motivated to open them later to permit additional registrants, particularly those with large losses. This can occur before they approach the defendants about potential settlement if their existing group isn’t large enough to convince them that a potential resolution will buy complete peace and not leave significant investors waiting in the wings.

LONG TERM
Over the long term, things will likely return to where they were before the High Court decision. Litigation costs money. If investors insist on being represented on a no-win no-fee basis, with all costs advanced, the money has to come from somewhere else. It also must earn a return sufficient to justify the time to resolution and risk of litigation failure. Right now, that risk and return is on the funder, who is financing investors directly by means of a funding agreement. Past successes have attracted more capital sources, including US law firms, and over time the increased competition has lowered commission rates from high double digits to high single digits.

If contingency fees are now allowed, the capital source will still require a return for time and risk, but it will shift from funders to the lawyers. In the short term, the new source of funding – lawyers – will put further pressure on commission rates. Longer-term, funders will likely shift gears, setting up local law firms or financing lawyers directly rather than through the investor groups.

From the investors’ perspective, things should still look the same in the long run. They will still be represented on a no-win, no-fee basis, with all costs advanced, and the process will return to something similar to the pre-High Court decision landscape without up-front registrations and with a back-end process resembling an administration.

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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.

Financial Recovery Technologies Continues APAC Expansion with Melbourne Office Opening and General Manager Hire

Brian Slade joins Financial Recovery Technologies 

Medford, MA, March 5, 2020 — Financial Recovery Technologies (“FRT”), the leading provider of securities class action recovery services to institutional investors, continues to boost its commitment to clients in the Asia Pacific region with the hiring of Brian Slade as General Manager – Sales and Relationship Management. He joins FRT after holding a General Manager of Australia and New Zealand role at Goal Group of Companies and will be instrumental in driving the opening of the Melbourne office.

“The decision to open a second office in Australia was a logical step in our APAC growth strategy,” said Sean Cookson, VP and Managing Director, APAC, FRT. “As securities class action activity continues to increase in Australia, there is an increasing need for institutional investors to have robust systems and processes in place for effective monitoring, filing and recoveries.”

The new office in Melbourne and appointment of Slade will further accelerate FRT’s growth and expansion in Asia Pacific. The company has a previously established office in Sydney. He will work closely with Sean Cookson, Vice President and Managing Director – APAC, and Steven Longley, Senior Vice President, Corporate Development, Financial Recovery Technologies.

“Brian has unmatched experience in the shareholder litigation and financial markets, space,” said Steven Longley, Senior Vice President, Corporate Development, FRT. “Having worked at Bank of New York Mellon for over 17 years, and Goal Group for the past six, his experience and expertise will be crucial in continuing to drive exceptional client experience and growth across Australia and Asia for the FRT team and we are thrilled to have him join us.”

FRT has more than 800 institutional clients worldwide including leading superfunds, asset managers, sovereign wealth funds, hedge funds, pension funds and private banks with more than $28 trillion in collective assets under management.

 

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About Financial Recovery Technologies
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 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. Financial Recovery Technologies is a Cross Country Group company (http://www.ccgroup.com). For more information, go to www.frtservices.com.

FRT Media Contact:
Haley Tole, Paragon PR
haley@paragonpr.com
+1 646.558.6226

FRT Marketing Contact:
Jennifer Rothenberg, VP of Marketing
jrothenberg@frtservices.com
+1 339.674.1608

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.

Financial Recovery Technologies Boosts Australia Presence with APAC Vice President and Managing Director Hire

Sean Cookson joins Financial Recovery Technologies 

Medford, MA, February 6, 2020 — Financial Recovery Technologies (“FRT”), the leading provider of securities class action recovery services to institutional investors, has appointed Sean Cookson as Vice President and Managing Director, APAC. He joins FRT after having held senior sales, strategy, business development and marketing roles within financial and information services across Asia, Australia and New Zealand.

FRT is rapidly expanding its international presence as activity in shareholder class actions outside the U.S. continue to gain momentum. FRT first entered the Australian market in 2014, primarily to help Australian fund managers track offshore litigation related to their global holdings. Now, FRT is monitoring over 50 local class actions following increased litigation in the region.

The appointment of Cookson demonstrates FRT’s continuing commitment to provide an exceptional client experience and drive growth across Australia and Asia. He will be based in the Sydney office, working closely with Steven Longley, Senior Vice President, Corporate Development, and report to Rob Adler, Chief Executive Officer, Financial Recovery Technologies.

“The growth and development of the Australian securities litigation market has seen a dramatic increase in recent years,” said Longley. “More investors are turning their attention to monitoring both local and global class actions, and FRT is uniquely positioned to help them.”

“I am thrilled to join the FRT team and look forward to driving momentum in the Australian class actions space over the coming months,” said Cookson. “Having worked in both financial and information services for over 15 years, the opportunity to take on the securities class action space on a global scale with a leading firm like FRT was one I could not pass up.”

“Sean is key to better serving our clients in Asia Pacific and expanding our foothold in the region,” said Adler. “His wealth of experience across the financial and information services industries will be critical in helping drive our continued growth and expansion not only in Australia but across the entire Asia Pacific region.”

FRT has more than 800 institutional clients worldwide including leading superfunds, asset managers, sovereign wealth funds, hedge funds, pension funds and private banks with more than $28 trillion in collective assets under management.

 

###

About Financial Recovery Technologies
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 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. Financial Recovery Technologies is a Cross Country Group company (http://www.ccgroup.com). For more information, go to www.frtservices.com.

FRT Media Contact:
Haley Tole, Paragon PR
haley@paragonpr.com
+1 646.558.6226

FRT Marketing Contact:
Jennifer Rothenberg, VP of Marketing
jrothenberg@frtservices.com
+1 339.674.1608

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.