Institutional investors miss millions by ignoring US class action lawsuits
March 16 2008, 2:57 pmUK institutional investors that do not take part in US class action settlements are losing out on millions of pounds from settlements, a specialist warns.
A report from Goal Group shows that between 2000 and 2007 institutional investors’ non-participation in US securities class actions resulted in nearly $12bn (£6bn) being left on the table.
Some $3.6bn (£1.85bn) of this is attributed to European investors.
The company is urging investors and fund managers to stop ignoring “the opportunity to claim damages to which they are legally entitled”.
Managing director Stephen Everard said: “It is the judgement of the legal profession that there is a clear duty of care for institutional investors to register claims on behalf of their clients, but our research shows that non-participation is costing investors dearly.”
Goal Group said UK shareholders are becoming more involved with US class actions – which on average have settlements of around $54m (£27m) – but it is a complicated process.
Everard said: “The typical European share portfolio has become strongly international – the average balance is currently in the order of 75pc domestic shares, 25pc foreign shares – and this is driving European shareholders’ awareness that they could be left out of securities class actions in the US unless they take an active role in a lawsuit.
“However, it can be a complicated and daunting task – and many institutional investors believe that the cost and time involved is likely to outweigh the benefits.
“This is often a misapprehension, but perhaps explains why 25pc of claims that could be filed by entitled parties are left unprocessed.
“There is an urgent need [indeed, legal obligation] for institutional investors to make claims on behalf of their clients. And since there are no low-cost services which are already enabling many financial organisations to do so, there remains no excuse for ignoring this important client responsibility.”
UK institutional investors that do not take part in US class action settlements are losing out on millions of pounds from settlements, a specialist warns.
A report from Goal Group shows that between 2000 and 2007 institutional investors’ non-participation in US securities class actions resulted in nearly $12bn (£6bn) being left on the table.
Some $3.6bn (£1.85bn) of this is attributed to European investors.
The company is urging investors and fund managers to stop ignoring “the opportunity to claim damages to which they are legally entitled”.
Managing director Stephen Everard said: “It is the judgement of the legal profession that there is a clear duty of care for institutional investors to register claims on behalf of their clients, but our research shows that non-participation is costing investors dearly.”
Goal Group said UK shareholders are becoming more involved with US class actions – which on average have settlements of around $54m (£27m) – but it is a complicated process.
Everard said: “The typical European share portfolio has become strongly international – the average balance is currently in the order of 75pc domestic shares, 25pc foreign shares – and this is driving European shareholders’ awareness that they could be left out of securities class actions in the US unless they take an active role in a lawsuit.
“However, it can be a complicated and daunting task – and many institutional investors believe that the cost and time involved is likely to outweigh the benefits.
“This is often a misapprehension, but perhaps explains why 25pc of claims that could be filed by entitled parties are left unprocessed.
“There is an urgent need [indeed, legal obligation] for institutional investors to make claims on behalf of their clients. And since there are no low-cost services which are already enabling many financial organisations to do so, there remains no excuse for ignoring this important client responsibility.”
