When a securities class action settlement is approved, the work of the defense lawyer and the client who just wrote a check is largely done.

But the work is just beginning for those making claims, especially in cases involving multiple claims or sophisticated investment vehicles. That's pretty evident from a new report from fintech company Broadridge, which helps institutional investors like hedge funds, pension funds, asset managers, and broker-dealers track litigation and navigate the claims process. Broadridge, which tracked more than 175 class action "asset recovery opportunities" for clients last year in cases yielding more than $4 billion in recoverable assets, ranked the 10 most complex opportunities in its report released Wednesday.

"Asset recovery opportunities have never been more important," said Steve Cirami, the head of Broadridge's class action team, when the Lit Daily spoke with him about the report Wednesday. "You've got an economic downturn and financial institutions are looking to maximize their recoveries both for their own proprietary accounts, but also for their client-base." 

Cirami, who did stints as an associate at Clifford Chance and King & Spalding before a long tenure working at one of the country's largest claims administrators prior to joining Broadridge last year, said that even the most savvy and proactive investors need help navigating the class action and collective action claims process.

 "You really need to make sure you do the front-end work so that you have the information you need when these opportunities arise."

The following Q&A has been edited for length and clarity.

Lit Daily: You reported that there were more than 175 class action asset recovery opportunities for 2019 with total assets amounting to more than $4 billion. So what's an asset recovery opportunity? 

Steve Cirami: The lion's share is United States federal securities fraud cases. When there's a settlement, that results in a pool of money for investors. To get a share, you've got to, at a minimum, track the case, have your data available that would apply and file a claim, typically with a claims administrator. That's an asset recovery opportunity. 

But in the financial services community, it's really gotten a lot broader than that. Twenty years ago, that's kind of all it was: You owned stock in a securities fraud case. But now you've got U.S. antitrust cases that involve foreign exchange instruments. You've got international cases that involve instruments that are impacted by LIBOR. There are Securities and Exchange Commission Fair Funds and Department of Justice regulatory matters that could be an asset recovery opportunity for someone invested in securities, and they're popping up in Europe, in Germany, in Brazil. The EU parliament just passed class action legislation that will cover the financial service markets in the coming years. So there's really opportunities all over the world. When we say there were 175 cases last year long, those are cases where if you had owned the securities at issue, there's money out there, and if you don't go after it and get what you're owed, then you're leaving money on the table. 

Lit Daily: So your report is taking stock of those that involve the most work on the claimant side?

Cirami: That's right. The most work and also the most opportunity to make a mistake. We wrote this report because the questions from our client base tend to be around the complicated cases. The market generally understands your general common stock equity cases. But there are more and more complex cases because of new laws, antitrust laws, new jurisdictions in the EU and under Dutch law and under German law. We're getting asked about those more frequently. So we thought it would be useful to put out a report that discussed how to prepare in advance for cases with similar requirements.

What struck me when we put the report together was that we were looking at cases by complication, not size, and the 10 most complicated cases out of the 175 account for more than half the settlement funds. So, it's a material issue.  

Lit Daily: So in the consumer class action space, especially in some federal courts, there have been moves to make the claims process simpler? Has the nature of the claims, the statutes and the complexity of the underlying financial instruments and the cross-border nature of some of these cases you're looking at made that sort of streamlining impossible? 

Cirami: It's partly that. It's partly that it's case-by-case and jurisdiction-by-jurisdiction. But really we're talking about complex financial products. We're not talking about "Did you buy a gallon of milk and was it organic and was it nor organic?" where you can prove with a receipt or an affidavit that you sign under oath that "Yes, I've bought three of these in the last year, so I get $30."  

We're talking about complex financial instruments. We're talking about not just equities but bonds, fixed-income, or some of these products that I was talking about that were impacted by LIBOR. The recent LIBOR case has 40,000 different [individually identifiable securities]. You're going to have to search your records to see which of your accounts or which of your clients accounts had one of these 40,000 instruments. Then you have to provide sufficient detail so that a claims administrator can calculate damages, and we're not talking about a $20 or $30 check. In many cases, we're talking about payments that can be seven- or eight-figures just to one financial institution. So, it's a different ballgame than a consumer class action.

Lit Daily: In this top 10, are there trends or general characteristics that carry across them or are they more bespoke problems to each? There does seem to be a certain cross border flare to many of them. Are there other issues that are bubbling into many of them?

Cirami: Yeah, I think the biggest trend, unfortunately, is that they are bespoke. You see in a couple of the Canadian cases that they're looking for the claimant to actually put together calculations—that's across a couple of cases there. The opt-in situations in Europe and in South America have some trends where you've got to be more active, because it's an opt-in case that hasn't settled yet. But really it depends on the product you're looking at, it depends on the information available to the claims administrator. The trend is that it's becoming more complicated, unfortunately, for some of these large cases. 

Lit Daily: It seems to me that the problem in some of these cases will be in the actual record of purchase. It will be issues that are hard to remedy if you haven't done your work on the front end. Is that fair to say?

Cirami: That's a great way to put it. I think two or three of the cases talk about a very old class period where you need trade data going back 15 or 17 years. Both with timing and in the nature of the complicated products, you really need to plan in advance. You need to know the minute that the litigation is out there and you need to make sure you save and preserve your data and you need to store it in a way that you can provide the necessary information. If you can't provide certain information and it's not kept on your books in the ordinary course, you may not be able to file a claim at all. 

Lit Daily: If I'm a litigator looking at this report from either side of the v., what would I take away from it? 

Cirami: We wrote it geared toward the general counsel's office of a company that's investing in these securities. But I think if you're litigating the case, whether you're on class counsel's side or you on the defendant's side, it's very clear that the types of cases, the laws that are involved are changing. Ten years ago, most of the securities cases were typical accounting fraud. You're seeing a lot more creative claims and causes of action. There's a lot more event-driven litigation surrounding things like stock drops as a result of a data breach, or [VW's] Dieselgate is a good example, or even the Me Too movement. Now we're seeing lots of COVID-related stock drop cases. There's a few hundred so far this year falling from that. 

I think it's important to stay on top of those legal issues and then staying on top of the issues surrounding products themselves, particularly in the complicated products, you need to have a deep understanding of how they work and how they operate when you're litigating cases.