Each of the various published studies of the 2005 securities class actions has its own average settlement amount for 2005 securities class action settlements. The Cornerstone study reported an average 2005 securities class action settlement of $28.5 million, not including the WorldCom settlement. The NERA study reported an average settlement of $24 million, not including the WorldCom settlement. By contrast to these two reports, which are more or less in the same ballpark, the PricewaterhouseCoopers study reported an average settlement of $71.1mm, not including the WorldCom and Enron settlements.
The explanation for this difference can be found in the footnote 1 on page 18 of the PwC study, in which the authors state:
Settlement year is determined by the year the settlement is disclosed. Settlements listed for 2005 include some that were announced and/or preliminarily approved in 2005.
The PwC study’s use of the date of the settlement’s announcement contrasts with the NERA study’s and the Cornerstone’s study’s use of the date of the settlement approval. Because the PwC study uses the announcement date, it has included within the 2005 settlements a number of very large settlements that were announced but not yet approved in 2005. These other settlements include the $1.1 billion Royal Ahold settlement (announced in November 2005), the $2.5 billion AOL Time Warner settlement (announced in April 2005, preliminarily approved in September 2005, but not finally approved until February 2006), and the McKesson $960 million settlement.
One of the PwC’s study’s authors has confirmed this analysis to me.