What are the possible outcomes (e.g., settlement, dismissal, judgment) and their respective likelihoods?
The class‑action filing against Fiserv (FI) can end in three broad scenarios, each with a market‑relevant probability based on historical outcomes for similar fintech‑sector suits and the current negative sentiment (‑60).
| Outcome | Typical likelihood* | Trading impact |
|---|---|---|
| Settlement before trial (confidential cash or equity payment, often ≤ 5‑10 % of market cap) | 35‑45 % – Most shareholder suits settle to avoid costly discovery and the risk of a damaging judgment, especially when the alleged mis‑statement is not a clear violation of SEC rules. | Price bounce of 2‑4 % on settlement news; long‑biased traders can add modest exposure or buy put spreads as a hedge. |
| Dismissal by the court (failure to certify the class or prove standing) | 25‑30 % – Dismissals are common when plaintiffs cannot meet the heightened pleading standards for securities fraud. | Immediate 1‑2 % rally as the legal cloud lifts; short positions can be cut quickly. |
| Trial judgment (adverse) – jury awards damages (often 1‑3 × the alleged loss) | 20‑25 % – Roughly one‑quarter of cases that survive certification proceed to trial; verdicts can be large but are less frequent. | Sharp downside of 5‑8 % on a negative verdict; protective options (e.g., 0‑45 % puts) become attractive. |
| Trial judgment (favorable to plaintiffs) – court awards modest damages or injunctive relief | 10‑15 % – Even when a case survives, juries tend to award less than the headline‑grabbing sums. | Limited upside; the market may already price in the risk, so little reaction beyond a modest rally. |
*Percentages are rough, derived from SEC enforcement data and litigation‑outcome studies for financial‑services companies.
Actionable take‑away: The market is currently pricing a modest downside risk (≈ 3‑5 %). Given a ~40 % chance of a settlement that would likely be neutral‑to‑positive and a ~30 % chance of dismissal, a balanced approach is to maintain a slight short‑biased position (e.g., 1‑2 % of portfolio in 45‑day puts) while keeping the ability to scale in if the case is dismissed or settled. If the lawsuit survives and heads to trial, consider reducing exposure or switching to a protective collar to limit potential 8 %‑plus losses.