Securities Litigation

Transcription

1 Securities Litigation Q An Advisen Webinar Sponsored by Copyright 2010 Advisen Ltd.

2 Securities Litigation Insight Quarterly report on securities litigation Copy of these slides Recording of today s webinar List of filings and related cases (fee) Case details (fee) D&O Commercial Insurance Group

3 Presenter and Report Author John Molka, Senior Industry Analyst and Editor

4 Today s Panelists Steve Carabases, VP of Claims at ACE Kevin LaCroix, Partner in OakBridge Insurance Services, and Author of Weblog The D&O Diary. Adam Savett, Director of Securities Class Actions, Claim Compensation Bureau, LLC

5 Securities Litigation Q Key Developments New suits filed remained elevated, led by breach of fiduciary duty suits. Securities class action and securities fraud suits lower percentage than recent years. Financial firms still lead, but much more broadly dispersed: IT, healthcare firms, and consumer discretionary. Credit crisis-related new suits all but gone, but lead in settlements. Dodd-Frank Act signed governance issues for all firms.

6 Securities Litigation Q Note: 2010 is annualized.

7 Case Breakdown Q3 2010

8 Case Breakdown Q3 2010

9 Sector Impact Metric YTD Financials Information Technology YTD

10 Market Cap Impact Metric Note: 2010 aggregate is annualized.

11 Market Cap Impact Metric Credit Crisis-Related Cases v. All, Average Market Cap Drop

12 Globalization of Securities Litigation Note: 2010 number of cases is annualized.

13 Today s Panelists Steve Carabases, VP of Claims at ACE Kevin LaCroix, Partner in OakBridge Insurance Services, and Author of Weblog The D&O Diary. Adam Savett, Director of Securities Class Actions, Claim Compensation Bureau, LLC

14 Securities Litigation Options Backdating Review Sponsored by Copyright 2010 Advisen Ltd.

15 Options Backdating The Initial View Ira Kay of compensation consulting firm Watson Wyatt predicts that, ultimately, no more than 100 firms will be found guilty of backdating options, and probably far fewer. (Advisen Quicknote June 6, 2006) It appears that most ESO backdating and many of the related misrepresentations and omissions occurred before August Accordingly, defendants will likely move to dismiss ESO backdating claims on the grounds that they are time-barred. (Sedgwick, Detert, Moran & Arnold LLP) pension funds in the United States, Europe and Australia had retained the Lerach Coughlin law firm to sue "dozens of companies" over the timing of stock options grants to their top executives. (D&O Diary June 15, 2006) According to John Degnan, the Chief Administrative Officer of Chubb, "[t]he early hype about the impact of backdated stock options on D & O insurers may be overblown." (D&O Diary July 28, 2006)

16 Options Backdating Context Event Time Period Count of Cases* Total $ to Date* In Re IPO $700M Options Backdating Sub-Prime/ Credit Crisis $4,300M ,085 $5,000M * Source: MSCAd Database

17 Options Backdating Cases in MSCAd 423 total cases $4.3B in total settlements 245 Derivative cases involving 160 organizations 100 Securities Fraud involving 38 organizations 42 Securities Class Action 11 Breach of Fiduciary Duties 8 ERISA cases Professional cases including auditing, underwriting and consulting malpractice

18 Number of Derivative Cases Filed

19 Aggregate Derivative Settlements by Filing Year Healthsouth $2.9B Settlement

20 Today s Panelists Steve Carabases, VP of Claims at ACE Kevin LaCroix, Partner in OakBridge Insurance Services, and Author of Weblog The D&O Diary. Adam Savett, Director of Securities Class Actions, Claim Compensation Bureau, LLC

21 Tracking the Options Backdating Related Securities Class Actions Adam T. Savett Director of Securities Class Actions Last Updated: October 2010

22 Options Backdating Federal Securities Class Actions: Quick Stats 39 Cases Total 30 substantially or completely settled; 7 dismissed 18% Dismissal Ratio Total Settlement Value = $2.36 billion Average settlement = $78.8 million Median settlement = $16 million

23 Options Backdating Settlement Review Total Issuer contributions to Settlements (17)- $1.815 billion Average - $72.62 million (ex UHC - $38.36 million) Median - $2.25 million (ex UHC - $1.97 million) Individual D&O contributions to Settlements (4) - $102 million Average - $3.92 million Median - $0 Insurer contributions to Settlements (18) - $ million Average - $10.72 million Median - $8.52 million

24 Claims Compensation Bureau For More Information, Please Contact: Adam T. Savett Director, Securities Class Actions Claims Compensation Bureau (610)

25 Today s Panelists Steve Carabases, VP of Claims at ACE Kevin LaCroix, Partner in OakBridge Insurance Services, and Author of Weblog The D&O Diary. Adam Savett, Director of Securities Class Actions, Claim Compensation Bureau, LLC

26 Mark Your Calendars Now! Advisen s 2010 Review and Analysis Friday January 21, AM eastern

27 Securities Litigation Insight Quarterly report on securities litigation Copy of these slides Recording of today s webinar List of filings and related cases (fee) Case details (fee) D&O Commercial Insurance Group

28 Securities Litigation Q An Advisen Webinar Sponsored by Copyright 2010 Advisen Ltd.