The Increasing Trend of Opt-Outs in Securities Class Action Settlements and its Implications for Litigants

Active

Program Number

3430

Program Date

2024-03-28

CLE Credits

The majority of securities class actions that are not dismissed are settled. These settlements often contain broad releases aimed at ending litigation and provide class members with the right to object or opt out of the settlement. Parties frequently agree on provisions that allow defendants the option to cancel the settlement if a certain percentage of the class elects to opt out. In recent years, there has been a notable increase in the percentage of class members opting out of settlements. This growing trend of opt-outs is a pressing concern for parties involved in securities class action litigation.

This program will address the reasons behind opt-outs, including the preservation of the right of individual litigants to bring a direct action against defendants and the potential for larger recoveries. The program will also discuss the potential risks and costs for both defendants and opt-out plaintiffs, as well as the potential impact of this trend on D&O insurance carriers' policy pricing.