November 09, 2017 Articles

How to Estimate Potential Damages Exposure in Securities Class Actions Using Claims Rate Data

Data from two cases show the extent to which aggregate damages estimates can exceed approved damages claims

Catherine J. Galley, Erin E. McGlogan, and Pierrick Morel

“Plaintiff-style” aggregate damages are commonly calculated for securities class actions. These estimates provide the plaintiffs’ view of the defendant’s potential dollar exposure assuming the plaintiffs prevail on the merits of their case. Despite criticism of typical plaintiff-style aggregate damages, including those made by several courts, such damages, along with aggregate damages estimates that incorporate defendant adjustments (typically concerning class period and inflation), can play an important role throughout the life cycle of a case, particularly when it comes to settlement negotiations.

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