Filings of Securities Class Actions in Canada Reach New High

TORONTO--()--Securities class action filings in Canada reached their highest level to date in 2011 with 15 new filings, according to NERA Economic Consulting’s annual report, Trends In Canadian Securities Class Actions: 2011 Update. The previous high was 12 filings in 2008.

Driving this increase in filings are so called “Bill 198” cases, which are those involving claims in respect of an issuer’s continuous disclosure obligations pursuant to PartXXIII.1 of the Ontario Securities Act (OSA) and analogous sections of the other provincial securities acts. Nine of the 15 cases filed in 2011 were Bill 198 cases, compared to the seven filed in 2010. A total of 35 Bill 198 cases have been filed since the new provisions came into force in 2005. Of these, 24 remain unresolved, 10 have settled, and one has been dismissed.

“The uptick in securities class actions filings observed since 2008 is clearly not a transient phenomenon,” said NERA Senior Vice President and Trends co-author Mark Berenblut. “This trend has been driven by filings of Bill 198 cases, which account for more than two-thirds of the cases filed between 2008 and 2011.”

“This upward trend seems likely to continue at least through 2012. Several factors may influence the number of filings and the size of settlements in the future, including future rulings in leave applications, certification motions, and any trial judgments, as well as the evolving landscape of US class actions involving foreign companies and investors following the US Supreme Court decision in Morrison,” added NERA Vice President and Trends co-author Brad Heys.

Filings against Chinese Companies

Three of the new filings during 2011 were made against Chinese companies whose shares trade on the TSX or TSX Venture Exchange. These filings are a reflection of one of the major trends driving class action filings in the United States last year. The filings in Canada include the case against Sino-Forest—one of the highest-profile suits brought against Chinese companies on either side of the border.

Additional Securities Class Action Trends

Other key findings from the report include:

  • There are 45 active Canadian securities class actions as of 31 December 2011. These cases represent a total of approximately CAN$24.5 billion in outstanding claims.
  • Of the six non-Bill 198 class action filings made in 2011, one involved only prospectus claims, one is related to a takeover bid, two involved allegations related to the management of investment funds, and two involve allegations of a Ponzi scheme.
  • As noted in previous annual reports, Canadian companies face the risk of class action litigation in the United States, with parallel actions in Canada. In 2011 five Canadian-domiciled companies were named as defendants in six securities class action filings in the US, up from the three cases filed in each of 2009 and 2010, but down from the eight cases filed in 2008.
  • Two cases settled in 2011 for total payments by defendants of $58.6 million. This includes the actions against Norbourg Asset management ($55 million) and Redline Communications Group ($3.6 million).
  • Ontario continues to be the venue for the majority of Canadian shareholder class action filings. In 2011, 12 of the 15 new cases were filed in the province.
  • Five of the 15 Canadian securities class actions filed in 2011 were brought against companies in the minerals sector and four were brought against companies operating in the finance sector. Two were brought against forestry companies.
  • In 2011, the average time to filing was about 10.5 months from the end of the proposed class period. However, the median time to filing cases filed was significantly lower in 2011 at just under three months, down from approximately twelve months for cases filed in 2010.

Class Action Trend Series

NERA has been analyzing trends in securities class actions for more than 15 years. In addition to this Canada Trends report, the firm produces two US Trends studies annually, and reports for the UK, Australia, Japan, and Italy.

This year-end study was authored by NERA Economic Consulting Senior Vice President Mark Berenblut and Vice President Bradley Heys.

Trends In Canadian Securities Class Actions: 2011 Update may be downloaded from:

About NERA

NERA Economic Consulting ( is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For nearly half a century, NERA's economists have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world's leading law firms and corporations. We bring academic rigor, objectivity, and real world industry experience to bear on issues arising from competition, regulation, public policy, strategy, finance, and litigation.

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NERA Economic Consulting
Benjamin Seggerson, 202-466-9232
Public Relations Manager


NERA Economic Consulting
Benjamin Seggerson, 202-466-9232
Public Relations Manager