|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
Institutions Increasingly Filing Own Securities Suits; Higher Damages, Friendlier Courts Fuel Stand-Alones
Sara Hansard
Investment News. November 6, 2006
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EXCERPT: Institutional investors such as mutual funds and pension funds increasingly have turned to filing their own securities lawsuits over the past several years rather than merely settle for whatever they receive from class actions. That is one of the recent developments in securities fraud lawsuits, according to Washington attorney Andrew Pincus, who spoke Oct. 26 at the seventh annual Legal Reform Summit in Washington, which was sponsored by the U.S. Chamber of Commerce Institute for Legal Reform and the National Chamber Foundation, affiliates of the U.S. Chamber of Commerce here.
Follow the money ``This is an area of the law where there's a lot of money flowing through the system,'' Mr. Pincus told the approximately 150 corporate attorneys and businesspeople at the conference. ``That's attracted some of the most entrepreneurial of lawyers,'' he added. Previously, ``most people were content to just throw in their lot with the class action[s],'' Mr. Pincus said in a telephone interview. State courts are seen by the plaintiff's bar as being more friendly to securities lawsuits than federal courts, where standards for filing cases are tougher to meet. The Securities Litigation Uniform Standards Act of 1998 requires large securities class actions to be filed in federal court, and filing stand-alone cases is a way around that law, Mr. Pincus said. The amount of money at issue has grown substantially in recent years, Mr. Pincus said at the conference. As stock market volatility and market capital have increased, so has the amount of damages, he said. In 2004, there were $2.9 billion in securities settlements, of which between 20% to 30% went for plaintiff's attorneys' fees, Mr. Pincus said.
In 2005, the amount of settlement money from securities suits reached $3.5 billion, even excluding the mammoth WorldCom Inc. settlement, he said. Including that settlement, securities settlements reached $9.6 billion last year. WorldCom of Clinton, Miss., filed for bankruptcy in 2002 after accounting irregularities were exposed, and the company was later taken over by MCI Inc. of Ashburn, Va., which in turn was purchased early this year by Verizon Communications Inc. of New York. ``Some pension funds or mutual funds have been persuaded to opt out of class actions [and] bring their own cases in a favorable state court, a place where litigation can proceed quickly,'' Mr. Pincus said at the conference. |
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