19 May 2017

Institutional investors increasingly involved in global and antitrust litigation

Institutional investors have moved beyond traditional US securities litigation efforts to focus on damages in non-US jurisdictions and antitrust violations.

In 2016 institutional investors recovered billions in global and antitrust settlements as investors saw an increased opportunity in these emerging areas of class action litigation, according to the report Securities Litigation & Class Action Trends – 2016 Year in Review from Financial Recovery Technologies (FRT), a leading securities class action recovery services provider.

Record number of opt-in actions

Outside of the US and Canada, the global securities litigation landscape saw a record number of opt-in actions filed – nearly a 56 per cent increase from the previous year – many of which were multiple actions filed against the same defendant by multiple litigation organisers. Institutions found that increased complexity in cases like Volkswagen - three actions proposed in Germany and two in the Netherlands – required enhanced capabilities and domain expertise to properly manage their risks while recovering damages incurred by securities traded outside the United States.

Opportunity

Antitrust litigation involves alleged misconduct affecting markets for non-securities instruments. In 2016, nearly $2 billion in settlement funds were recovered from the Credit Default Swap (CDS) antitrust case alone. Currently, more than $3 billion is being held for disbursement from landmark antitrust litigation like FOREX, ISDAfix, LIBOR and Euribor. In the over 40 active antitrust cases in various stages of litigation in the U.S. and globally, institutions are finding that each case requires unique data sets and analyses that often reach back 5-10 years.

The scale is great

‘Institutional investors are waking up to the massive pool of settlements that are currently available, and will be, as a result of global and antitrust litigation,’ said Rob Adler, President of FRT. ‘While the filing and claims processes are challenging for even the best staffed institutions, the opportunity to maximse recoveries on this scale is too great to pass up.’

Cost and complexity

Other research highlights include the fact that a record number of global opt-in actions were filed in 2016, with 43 new actions in nine different jurisdictions and marked by the $1.2 billion Fortis settlement in March of 2016, Dutch Foundations have emerged as a mechanism to resolve pan-European matters, including Volkswagen, Petrobras and FOREX Also, cost and complexity are still the determining factors for institutions' involvement in global litigation, leading to rapid increases in activity in ‘no-risk’ jurisdictions such as Australia, that reflect US claims filing.