Europeans urged to join US class actions
25 March 2008, 10:01 amEUROPE – European institutional investors are missing out on billions in damages by failing to participate in US securities class actions, according to a new report.
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GOAL Group, a withholding tax and class action service specialist in Europe, said its research showed that between 2000 and 2007 institutional investors’ non-participation in cases resulted in nearly $12bn being left on the table.
It said some $3.6bn of this could be attributed to European investors.
Stephen Everard, managing director, GOAL Group, commented: “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.
“It is true that participating in a class action requires timely and accurate information about the relative merits and procedural processes, and time and resources to review and evaluate relevant settlement provisions.
“Investors must then cross-reference these outputs against extensive individual trading activity data and compile and submit the often complex paperwork necessary to make a valid claim.
“But outsourced, automated services are available on the market to process class action claims without incurring high expense.”
GOAL Group said, in the absence of established mechanisms for joint actions in other legislatures (with the notable exception of Australia), class actions in the US courts were being used successfully by some European shareholders to seek redress for their losses.
However, it said when US investors controlled the litigation there was an increasing possibility that foreign investors might not automatically be included, because the fewer the claimants, the greater the cut of any settlement; and legal complexities could slow down the process.
This has inspired European companies to become active litigants in US courts in cases against European and US companies, according to GOAL Group.
