Ross Roundtable Discusses Trends in Securities Litigation
— April 15, 2013
“Our big finding this year is the SEC’s emphasis on individual accountability. … It seems the SEC is trying to go after individuals." --Jorge Baez
Some 50 academics, practitioners and policymakers gathered at NYU Stern on April 15 for a roundtable discussion on “The Inside Scoop on Securities Litigation for 2013.” Industry experts discussed new litigation trends and anticipated the SEC’s main areas of focus this year.
“Dodd-Frank brought a whole raft of new things we’re paying attention to,” said James Burns, deputy director in the division of trading and markets for the Securities and Exchange Commission (SEC). In speaking about some potential new areas of focus, he noted, “There were two new cases this past year, in 2012, dealing with the activities of two dark pools.”
Jorge Baez, senior consultant at NERA Economic Consulting, presented data on SEC settlement trends and noted, “Our big finding this year is the SEC’s emphasis on individual accountability. … It seems the SEC is trying to go after individuals.” He observed, “we saw this trend across the board” in different types of litigation.
Kathleen McCarthy, managing director and head of litigation for RBS Americas, discussed changes she has observed in litigation over the past few years, and discussed her experience with the LIBOR case. “We’re seeing investigations that are incredibly multi-pronged,” she noted.
Renzo Comolli, senior consultant at NERA Economic Consulting, looked at long-term trends in securities class action suits, as well as potential shifts following the Supreme Court’s decision on Amgen in February. He highlighted a long-term increase in average and median settlement values: “Average settlement amounts went from approximately $23 million in 2002 to $36 million in 2012, far outstripping inflation. … Median amounts increased from $5.3 million to 12.3 million.”
William Fredericks, partner at Scott + Scott LLP, asserted, “Amgen I don’t think is going to be a significant game changer, but no significant change in existing class certification requirements is good for securities plaintiffs.”
Richard Owens, partner at Latham and Watkins LLP, discussed what qualifies as insider trading and outlined several hypothetical scenarios. “The thing to remember about insider trading is that it’s both very malleable and very complex,” he said. “Insider trading is, oddly enough, a judge-made law.”
Assistant Professor of Accounting Mary Billings reviewed current academic research on securities litigation. Among the studies she highlighted was the recent finding that the involvement of an institutional investor on the plaintiff’s side increases the likelihood of a high-value settlement.