NERA supports its conclusion by noting that class actions involving backdating allegations have settled for less than half the amounts forecasted by NERA’s settlement prediction model. NERA explains that one reason class actions that allege options backdating may be settling for less than comparable non-backdating class actions is that the backdating cases may be perceived as weaker on the merits than other class actions.
Interestingly, NERA does not discuss the settlements of options backdating shareholder derivative actions, which seem to be settling for higher amounts than settlements of non-options backing shareholder derivative actions, specifically with respect to the plaintiff’s attorney’s fee award (many of which are still pending court appeal).