Securities class-action settlement amounts reach record highs

The average amount for settling securities class actions in 2023 was the highest in over a decade, Cornerstone Research said in a report released Wednesday.

The New York-based economic consultancy said the average settlement for a securities class action last year was $47.3 million, a 25% increase from 2022.

While the number of settlements for securities class actions dropped from 105 in 2022 to 83 last year, the total amount of the settlements for both years totaled nearly $4 billion.

Nine “mega settlements,” ranging from $102.5 million to $1 billion, accounted for 52% of 2023’s total settlements amount. The number of mega settlements — those totaling $100 million or more — was the highest since 2016.

The report said one factor contributing to the increased amount for settling class securities class actions is the median age of the publicly traded company being sued. The median age of the companies that settled a securities class action in 2023 was 16 years, whereas companies that settled cases from 2014 to 2022 had a median age of 11 years.

The report said the size of defendant companies in securities class actions could grow as a result of bank failures in 2023 and the rising number of settled cases involving financial companies.