Approved Claims Rates in Securities Class Actions

This analysis uses evidence from 2015–2024 Rule 10b-5 settlements.

Approved Claims Rates Trends

In “Approved Claims Rates in Securities Class Actions: Updated Evidence from 2015–2024 Rule 10b-5 Settlements,” which uses data from over 350 Rule 10b-5 securities class action settlements from 2015 to 2024, authors Nick Yavorsky, Chady Gemayel, and Jessica Nguyen compare total approved damages claims calculated by settlement claims administrators (Approved Claims) to a standardized measure of plaintiff-style estimates of aggregate damages (Plaintiff-Style Damages). The results show that, for the median case, Approved Claims are approximately 44% of Plaintiff-Style Damages and, on average, Approved Claims are approximately 52% of Plaintiff-Style Damages. While there is variation in Approved Claims Rates across cases, this study finds no clear trend in Approved Claims Rates over the 2015 to 2024 time period.

This study compares total approved damages claims calculated by settlement claims administrators to a standardized measure of plaintiff-style estimates of aggregate damages.

Important Role in Settlement Negotiations

Estimates of aggregate damages play a key role in settlement negotiations. Such estimates are typically based on probabilistic models of investor trading behavior and aggregate trading data that may not fully and accurately capture investor trading patterns. The results in this study indicate that such estimates, in particular Plaintiff-Style Damages, tend to overstate actual damages claimed by investors in settlements.