CRA Insights

Factors affecting variations in securities class action claims rates

October 2, 2020

Mukarram Attari, Aaron Dolgoff, Assen Koev

Claims rates are of interest to parties to the settlement process. Average claims rates, which are well below 100%, suggest either that plaintiffs’ class-wide damages estimates are too high or that many eligible class members do not submit claims. These average rates, however, obscure significant variation. Case-specific factors such as institutional ownership and the timing and extent of trading volume can significantly affect the accuracy of aggregate damages estimates. Understanding the assumptions behind such estimates and the magnitude of uncertainty about them is important when considering such estimates as part of settlement discussions.

In this Insights, the authors look at claims rates significantly below or above 100% to provide an understanding of the uncertainties surrounding damages estimation and settlement distribution in securities class actions.

Meet the authors