Considerations for Blow Provisions in Securities Class Action Settlements

Many securities class action settlement agreements include what is commonly referred to as a “blow provision.” Blow provisions are structured to give defendants the option to terminate a conditional class settlement agreement if a specified threshold is reached in terms of investors opting out of the settlement (opt outs). Without careful structuring, a blow provision may fail to give defendants the right to terminate or renegotiate a class settlement when opt-out exposure—the potential dollar amount of damages that opt-out investors may seek from defendants—reaches an unacceptable level relative to the initially agreed-upon settlement amount.

This article, originally published in 2016, outlines blow provision structures and applications.


The views expressed herein do not necessarily represent the views of Cornerstone Research.