Class action set to rise in Europe
GLOBAL - European institutional investors are increasingly participating in US securities class actions, a new study by international voting bureau Institutional Shareholder Services (ISS) shows.
Adam Savett, vice president of ISS' securities class action business, told IPE today: "In 2005 there was a record of nearly $8bn (€5.9bn) in US and International securities class actions that were finalised. This grew to $18.3bn in 2006."
It is also a sign European pension funds are beginning to see class action as a natural extension to their corporate governance, argued Savett, and more European investors will enter US securities class actions this year.
According to the research, aimed at quantifying the level of activity among international institutional investors in the US courts, German and Austrian institutional investors have been particularly active in class action.
That said, the lack of information and understanding among European institutional investors about US class action has so far prevented them from being more active in the field.
"It is still relatively unclear who is responsible for doing this work," whereas in the US there is a clear fiduciary duty among for instance public pension funds, added Savett.
However, this is expected to change as more US legal firms are opening offices in Continental Europe and the UK.
Last month, for instance, European institutional investors led by ABP and PGGM, the two largest Dutch pension funds, won a landmark securities claim from Shell relating to the oil giant's 2004 reserves misreporting scandal.
Savett predicts more European institutional investors will enter the arena of US securities class actions this year.