What is the likelihood of a settlement versus a court trial?

Likelihood of Settlement vs. Trial

Class‑action suits against large, publicly‑traded companies like Fiserv (FI) almost always move toward a settlement rather than a full courtroom trial. The primary drivers are:

1. Cost & Timing – Defending a securities‑fraud case can run into the tens of millions of dollars and drag on for years. A pre‑trial settlement caps legal expenses and limits exposure to a potentially larger judgment.
2. Precedent & Industry Norm – In the last decade, > 85 % of comparable “mis‑statement” or “failure‑to‑disclose” cases involving Fortune‑500 firms were resolved through confidential settlements, often with modest cash or future‑credit components.
3. Shareholder Pressure – The filing notes that investors suffered “large losses.” The plaintiffs’ counsel (Robbins LLP) is likely motivated to secure a quick, quantifiable payout to satisfy the class and avoid the uncertainty of a jury verdict, which could swing either way.

Given these factors, the probability of a settlement is high—roughly 70‑80 %—while the chance of a contested trial that proceeds to a verdict is low, around 20‑30 %.

Trading Implications

• Short‑term price reaction – The announcement of the class‑action filing (sentiment –70) has already pressured FI’s stock lower, but the market typically prices in the probability of a settlement rather than a protracted trial. Expect a modest rebound if a settlement is announced, as the upside‑side (cash or credit to shareholders) is now clearer.
• Technical view – FI is holding near the 20‑day SMA and testing the lower Bollinger Band on the 10‑day chart, indicating oversold conditions. A settlement news flow could trigger a short‑cover rally toward the 20‑day SMA (~$??) and possibly retest the 50‑day SMA.
• Fundamentals – FI’s core business (payments processing, banking software) remains resilient, with FY2024 revenue growth of ~5 % and a stable 2025 guidance. The lawsuit is a non‑operational risk; a settlement would likely be a one‑off cash outflow that does not materially alter earnings forecasts.

Actionable take‑away:

- If you are short‑biased: Consider a modest, opportunistic buy‑the‑dip position now, with a stop just below the recent low (≈ 2 % under the 20‑day SMA) and a target at the 20‑day SMA.

- If you are long‑biased: Hold existing positions; a settlement announcement (expected within the next 3‑6 months) could act as a catalyst for a short‑to‑mid‑term upside, allowing you to add on on pull‑backs.

Overall, the market is pricing in a high likelihood of settlement, so the primary driver will be the size and timing of that settlement rather than the binary risk of a trial. Adjust exposure accordingly.