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| 2002 News and Press Releases |
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HEADLINE ARCHIVED:
Deals & Deal Makers: Bids & Offers [Inside The World Of Corporate Finance & Wall Street]
By: Randall Smith, contributions from Kara Scannell and Paul Beckett
The Wall Street Journal. Friday, March 15, 2002
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Excerpt: The bear market may have produced a record number of securities class-action lawsuits last year against companies whose stock prices went down. But the dollar value of reported settlements actually declined. This is according to studies done by Cornerstone Research, an economic consulting firm in Menlo Park, Calif., which is becoming a sponsor of Stanford Law School's Web site, the Securities Class Action Clearinghouse. Though Cornerstone provides defense testimony in such suits, Stanford law professor Joseph Grundfest, the site's founder, says the site's objectivity won't be compromised because it merely provides "factual data susceptible to empirical verification." The number of such lawsuits rose 60% to 327 in 2001, and the companies sued lost more than $2 trillion in market value, a more than twofold increase compared with 2000, according to Cornerstone's study. That isn't counting an additional 138 securities class actions alleging fraud in the underwriting of initial public offerings. Yet the median settlement reported fell to $5.3 million from $5.7 million. As far as Mr. Grundfest is concerned, the data indicate that despite passage of a 1995 law that put new limits on securities class-action litigation, "there has been no material decrease in the volume of litigation activity." He added, "plaintiffs continue to have powerful economic incentives to sue many companies for large sums of money." One sidelight: Settlements of cases naming accountants had a median value of $14.8 million, nearly triple that of $5 million for cases that didn't name accountants.
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