January 6, 2010

Cornerstone And Stanford Release Report On Filings In 2009

Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse have released a report on federal securities class action filings in 2009. The findings include:

(1) A total of 169 federal securities class actions were filed in 2009, a 24% decrease from the previous year. In particular, filings related to the credit crisis were down sharply (from 100 filings in 2008 to 53 filings in 2009).

(2) The filing activity was more concentrated, with only 114 unique issuers sued (a decrease of 32%, as compared to the overall filing decrease of 24%). The study states that this was the result of a large number of filings against certain groups of mutual and exchange-traded funds.

(3) Despite the decline in credit crisis related filings, the financial sector continued to have the highest level of litigation activity with 84 filings.

(4) Given the long timeline of securities class actions, it takes several years to reach conclusions about the breakdown between settlements and dismissals. The study notes, however, that with more than 90 percent of the 2004 and 2005 filings resolved, there appears to have been an increase in the percentage of dismissed class actions compared to earlier years leading to a nearly 50-50 split. Whether that trend continues remains to be seen.

The joint press release announcing the report can be found here.

Quote of note (Professor Grundfest): "As predicted in last year’s report, the rate of litigation overall and particularly against financial firms declined from the financial crisis-fueled levels observed in 2008. Plaintiffs simply ran out of financial firms to sue, and the rising stock market made it harder for plaintiffs to assert claims."

Posted by Lyle Roberts at January 6, 2010 7:00 PM | TrackBack
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