(January 25, 2012) — The first class action lawsuit settlement to be approved for shareholders based outside the United States, since the Supreme Court tightened rules about international investors seeking redress through its legal system in 2010, has thrown a lifeline to asset owners suspicious of corporate fraud.
A case brought by international pension schemes, endowments and other large investors against Swiss reinsurer Converium Holding (now Scor Holding (Switzerland)), was settled out of court with damages of over $58 million being approved for distribution by the Amsterdam Court of Appeal last week.
The court was used once before in a similar case launched in 2007 against Royal Dutch Shell, when investors resolved their claims for €316 million with the oil giant. Since then, the US Supreme Court’s 2010 decision in Morrison vs. National Australia Bank, called time on investors seeking to recover damages incurred on securities purchased on an exchange outside of the US against non-US companies under the US securities laws.
Bruce Bernstein, Counsel at Bernstein, Litowitz, Berger and Grossmann, which served as co-lead counsel for the investor class in the Converium action, told aiCIO: “Following the Morrison decision, European investors and other non-US investors have faced new hurdles in seeking to recover losses due to alleged fraud.”
The move by the Dutch legal system in the Coverium case has now thrown them a new lifeline.
Bernstein said: “This result is significant for non-US pension schemes and other large investors, in the Netherlands and elsewhere. It is possible, following the successful outcome in Converium, that we will see non-US investors taking similar efforts in other matters in the Netherlands.”
He added: “The approved settlement offers an avenue of redress that some thought had been significantly limited because of the Morrison decision. It also could provide defendants whose shares trade on a non-US exchange with the opportunity to achieve global peace through a class wide resolution.”
Coverium had not responded to calls for comment at the time of going to press.