Despite record multibillion-dollar awards, shareholder class action filings dropped dramatically in 2006, according to a report by NERA Economic Consulting. Federal shareholder class actions filed from January 1 to December 15, 2006, numbered 129, compared with 211 filings in 2005.

However, 2006 included four multibillion-dollar settlements: $2.7 billion involving AOL Time Warner; $1.1 billion, Royal Ahold; and two $1.1 billion awards against Nortel Networks. The average shareholder class action settlement amounted to $86.7 million in 2006, up from $73.6 million in 2005; the 2006 average drops to $34 million, however, if the multibillion-dollar awards are excluded.

Why the number of class action filings has fallen is not clear, said the authors of the report. One theory, the authors said, is that improvements to corporate governance since the passage of Sarbanes-Oxley in 2002 has limited fraud, and, as a consequence, reduced the need to file actions. However, the authors believe it is more likely that the drop is due to “a distraction on the part of some of the largest plaintiffs’ law firms.”

The report also stated that 38 percent of class action cases filed between 1999 and 2004 were dismissed.

NERA Economic Consulting is a firm of economists that provides analysis and advice to corporations, governments, law firms, regulatory agencies, trade associations and international agencies. It is based in White Plains, N.Y., and has 22 offices in the U.S. and abroad.