2011 YEAR IN REVIEW
Securities Class Action Filings Increase Slightly in 2011, According to Report by Stanford Law School and Cornerstone Research. Filings Targeting Merger and Acquisition Transactions Remain High, and Chinese Reverse Merger Filings Decline in the Second Half of the Year.
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2011 MID-YEAR ASSESSMENT OF FILINGS
Securities Class Action Filings Decrease Moderately in First Half of 2011, According to Mid-Year Report by Stanford Law School and Cornerstone Research. Chinese Reverse Mergers and M&A Litigation Represent 47.9 Percent of Filings Activity
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POST-REFORM ACT SECURITIES SETTLEMENTS THROUGH DEC 2010
The Number of Securities Class Action Settlements Is Lowest in Ten Years, According to New Report by Cornerstone Research. Median Settlement Amount and Estimated Damages Increased for Cases Settled in 2010; Average Settlement Amount Decreased
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• The absolute number of issuers sued does not appear to have changed dramatically since passage of the Act, once the effects of the IPO Allocation Litigation are excluded. Litigation activity declined in 1996, but that decline was likely a transition effect;
• Since passage of the Reform Act, a larger percentage of litigation activity centers on allegations of accounting fraud, with revenue recognition issues emerging as particularly significant causes of litigation;
• Since passage of the Reform Act, a larger percentage of litigation activity also alleges trading by corporate insiders during periods when frauds are allegedly "alive" in the market;
• The dollar magnitude of settlement has increased noticeably, particularly in the settlement of "mega-cases." There have been seven post-Reform Act settlements in excess of $500 million: the WorldCom and Enron litigations are still pending, but have already reached settlement agreements of $6.128 and $4.760 billion, respectively; the Cendant litigation was settled for $3.525 billion ($3.185 billion in the common equity settlement and $340 million in the PRIDES settlement.); the IPO Allocation Litigation settled for $1 billion; McKesson is in the process to settle its class actions for $960 million; Lucent Technologies settled for $673 million; and Raytheon Corporation for $535 million.