Legal tussles over securities are important risks for banks and others to take into account because they can affect earnings and the provisions that must be made to cover the cost.

Global securities class action settlements soared reaching more than $5.2 billion across 136 settlements worldwide in 2024, fintech firm Broadridge Financial Solutions reports.

The 2024 settlement total trailed behind the 2023 result by 6 per cent but beat the five-year average by 5 per cent, with the US rising 14 per cent. The US tends to be the most litigious jurisdiction for such matters. Legal tussles over securities are significant risks that financial organisations such as banks, asset managers and brokerages must take into account. Firms such as Broadridge also provide data and tech solutions regarding such lawsuits, seeing these cases as ways to earn revenue.

The number of “mega-cases” rose: Some 10 cases each surpassed $100 million, exceeding a five-year mega-settlement average by 4 per cent, Broadridge said in its report, entitled Global Class Action Annual Report.

Among the top 10 most complicated legal cases in 2024 were those such as the Stock Loan Antitrust Class Action – $580,008,750; Mesoblast Securities Litigation – A$26,500,000 (16,468,783); European Government Bonds Antitrust Litigation – $120,000,000 (Combined); Perrigo Securities Litigation – $97,000,000; and Gatos Silver, Inc Securities Class Actions – $24,715,600 (Combined).

Broadridge said it has identified more than 300 newly-filed class and collective actions involving publicly traded securities, taking the total number of cases monitored – and yet to be resolved – to more than 1,000.

“While settlement values dipped slightly below last year’s figures, they exceeded the five-year average by 5 per cent, driven by an impressive 14 per cent growth in US settlements,” Steve Cirami, Broadridge Global Securities Class Actions leader, said.

The report said that anti-trust claim deadlines remained high; unresolved cases also rose, while a total of 222 new securities class action cases were filed at the Federal level.

ESG and Europe
The Broadridge report said ESG lawsuits surged, fuelled by investors using class-action cases to enforce their wishes.

While class-action cases have tended to be a dominant US story, Europe is catching up. The European Union continued its transition under the Representative Actions Directive (RAD), with compliance milestones met by Belgium, Germany, Ireland, Austria and Sweden in 2024. More than 100 collective redress claims were filed across Europe, setting a global precedent for opt-in litigation, the report said.

The report said cybersecurity issues became more important last year, with a sharp rise in cybersecurity-related settlements, including three of the year’s top ten cases totalling $560 million.

AI litigation is also rising as the use of artificial intelligence advances; cases alleging insufficient AI disclosures have doubled since 2020. Shareholders are demanding clarity on AI development risks and ethical implications, the report said.

The study examines global cases identified by the Broadridge Asset Recovery Advocate™ database involving publicly traded securities or financial instruments that use a class action process to recoup lost funds.