Canadian Lawsuits On The Rise

Plaintiffs brought a record number of securities class actions in Canada last year, more than doubling the total filed in 2007. According to research by NERA Economic Consulting, nine securities suits were filed in 2008, more than double the four cases brought in each of the previous three years. The 2008 total was also 80% higher than the previous record of five cases, set in 2004. Last year for the first time plaintiffs brought two lawsuits relating to the credit crisis and two relating to options backdating, two years after the number of new options cases peaked in the U.S.

The numbers of Canadian securities class actions continue to lag far behind those seen in the U.S. A total of 210 U.S. federal securities class actions were filed in 2008, according to Stanford Law School and Cornerstone Research. But the authors of the NERA report said the increased Canadian activity suggests that changes in provincial laws are starting to tempt plaintiffs to bring cases. Since 2005, Ontario, Quebec, Alberta and British Columbia have each introduced civil liability for continuous disclosure and a right of action investors claiming to have been harmed by misrepresentations or failures by issuers to make timely disclosures. "[The] rise in securities class action filings is an indication that plaintiffs' counsel are prepared to test the new provisions of the legislation," said Mark Berenblut, senior VP with NERA.