Many of us know the story of Erin Brockovich and the residents of Hinkley, California. Erin was instrumental in building a case against Pacific Gas and Electric (PG&E) on behalf of residents in Hinkley. In 1996 the case settled and at the time was the largest settlement ever paid in a direct-action lawsuit in US history.
Hinkley may well be the most famous class action in history, but there have been others since. Today we explore the 10 largest class actions in the world.
Investors in Enron (energy trading company) filed a class action claiming that directors had disguised losses within specially created entities and failed to disclose this in its annual reports to the United States’ Securities and Exchange Commission (SEC). This was designed to protect the company but instead destroyed it. The case was settled in 2006 paying out US$7.2 billion (AU$9.3 billion) to investors who lost money when the company collapsed in 2001. Some of Enron’s executives also received jail time for fraud and accounting firm Arthur Andersen went into liquidation
Investors with stocks in telecommunications company, Worldcom, claimed that the company had made improper classifications of expenses as capital costs and false revenue statements. The case was settled in 2005 and investors were awarded US$6.2 billion (AU$14.24 billion).
Visa and MasterCard were accused by retailers in 2005 for charging excessive fees and an alleged conspiracy to fix some credit card rates. This class action was settled in 2012 with a compensation payout of US$7.2 billion (AU$9.38 billion).
Swiss Securities company Tyco and its auditing firm Price Waterhouse Coopers were accused of misleading public statements and omitted information. The case was settled in 2007 with US$3.2 billion (AU$4.3 billion). Two of the company’s executives were also jailed for fraud.
- Cendant Corporation
Cendant were charged with securities fraud for overstating its income and issuing false profit statements by US$500 million. In 2000, US$3.1 billion (AU$4 billion) was paid to those affected and Vice Chairman, Kirk Shelton was jailed.
- Nortel Networks
Two separate class action lawsuits were filed for investors who held stocks in the company. Nortel was charged for creating false information, claiming that the company was booming when it was actually plummeting. Those affected were awarded US$2.4 billion (AU$3.1 billion)
Fen-Phen created a weight loss drug that was only available in clinics and online. The drug was linked to potentially fatal heart valve damage. Victims were paid a share of US$3.75 billion.
Citigroup investors took the company to court for poorly performing mortgage-backed securities that the bank had sold during the 2008 financial crisis. Last year, Citigroup agreed to pay US$7 billion (AU$2.3 billion) to settle the class action.
- AOL Time Warner
The media company was sued by investors for fraud. The company disguised its poor performance by forging dozens of transactions. Investors received US$2.5 billion (AU$3.2 billion).
- Household International
Customer finance company, Household International, was accused of inflating their shareholder price. Consequently, the value of the company decreased and was bought by HSBC. HSBC was then responsible for paying the US$2.46 billion (AU$3.1 billion) to those effected.
If you have been a victim of a wrong doing, you may be eligible for compensation. If the wrong doing has affected more than one person then you may be able to join a class action.
Written by Shine Lawyers on . Last modified: July 20, 2017.