QUANTIFYING DAMAGES IN GROUP AND SHAREHOLDER ACTIONS FOR THE FINANCIAL SERVICES SECTOR
CD: To what extent has litigation in the financial services sector increased in terms of both group and shareholder actions?
Dimech-DeBono: A number of factors contributed to the growth that we have observed during the past years in financial services disputes of both group and shareholder action in Europe. The global financial crisis brought a particularly difficult landscape for such litigation, but also increased incentives to litigate due to uncertainty and distress leading financial institutions to behave abnormally. Shareholder activism across Europe was also a major force, as institutional investors started to challenge boardroom pay and funds to pursue claims for misleading financial statements in investee companies. The rise of shareholder associations helped to facilitate the aggregation of claimants and the sharing of dispute costs. Another factor has been changes to the legislative and regulatory frameworks that have facilitated such claims to be taken forward. The development of insurance products and funding in the litigation market has also contributed to the growth trend in such actions over recent years. It is also worth mentioning the 2010 decision by the US Supreme Court in Morrison v. National Australia Bank, which held that investors that acquired securities outside the US were not able to bring claims pursuant to US securities laws.
Oct-Dec 2017 issue