When are Securities Class Actions Dismissed, When Do They Settle, and For How Much? - Part II
Citation
Publication Date:
March 01, 2010
Bibliography:
Michael Klausner and Jason Hegland, When are Securities Class Actions Dismissed, When Do They Settle, and For How Much? - Part II, 23 Professional Liability Underwriting Society (March 2010).
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It is well known that approximately one third
of securities class action suits are
dismissed, two-thirds settle, and hardly any
go to trial. There is also abundant data on
mean and median settlement amounts. But
a lot remains unknown about the detail
underlying these basic numbers. How
many times do courts give plaintiffs an
opportunity to amend a complaint before
finally dismissing a case with prejudice?1
How often do cases settle during the
pleading stage—that is, before a final ruling
on a motion to dismiss—and how often
during discovery? How many cases settle
before even an initial ruling on a motion to
dismiss? For cases that go to discovery,
how long do the parties continue litigating
before settling? How is settlement size
related to settlement timing? What factors influence settlement timing and size? These
questions, which we address below, are
potentially important to lawyers, claims
officers, monitoring counsel and others
involved in the litigation and settlement
process. They are important from a policy
perspective as well because they can help us
assess the total cost of this type of
litigation.