As the time it takes to resolve U.S. securities class actions grows, the volume of settlements declined last year, according to a new report from Cornerstone Research.
The report said the number of class action settlements fell by more than 21% in 2023, dropping to 83 from 105 in 2022.
However, the aggregate value of settlements was more or less unchanged, coming in at US$3.9 billion in 2023, in line with the US$4.0 billion recorded in 2022.
The total was bolstered by nine so-called mega settlements (worth over US$100 million), which accounted for almost two-thirds of total settlement value in 2023.
This combination of fewer settlements and the aggregate value of those deals remaining relatively flat means that the average settlement value increased, rising to US$47.3 million — a 25% increase from the previous year.
Cornerstone also reported that the median settlement amount increased by 11% year over year to US$15.0 million, which marked its highest level since 2010.
Additionally, the firm reported that the time it took cases to settle was unusually high in 2023, with the median time from filing to settlement coming in at 3.7 years.
“The fact that cases are taking longer to settle explains, in part, the drop in the number of securities class action settlements in 2023,” said Dr. Laarni Bulan, principal at Cornerstone Research, in a release.
“Disruptions associated with the Covid-19 pandemic may be contributing to this, but it is also worth noting that cases are reaching more advanced stages prior to resolution, including a smaller proportion of cases settled before a ruling on class certification compared to prior years,” she said.