|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
November Securities Lawsuit Filings Continue Upward Trend
Kevin LaCroix
The D & O Diary. December 2, 2007
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EXCERPT: In prior posts (most recently here), I noted that the two-year lull in securities filings that began in mid-2005 has ended. The trend of heightened securities lawsuit filing levels that have prevailed since mid-2007 continued in November 2007. In fact, the 25 new securities lawsuits filed in November (see list here) represents the highest monthly total of new securities lawsuits since January 2005, and the total of 81 new securities lawsuits filed during the four-month period from August 1, 2007 through November 30, 2007 represents the highest four month total since the period from July to October 2004. The total of 81 new securities lawsuits for the August to November 2007 period implies an annualized 12-month filing rate of 243 class actions, which, were it a year-end total, would represent the highest annual filing rate since 2002, the year of many of the major corporate scandals. It might well be presumed that the heightened securities litigation activity is being driven by the subprime meltdown, and the subprime problems are indeed an important contributing factor – but only one factor among many. For example, during November, by my assessment, only four of the 25 new securities lawsuits were subprime-related (Washington Mutual, Citigroup, Freddie Mac, and ACA Capital). Other sectors, far removed from the subprime problems, also saw substantial new securities lawsuit activity during November. For example, three of the 25 companies sued for the first time in November (Vodaphone Group, Virgin Mobile, and Leap Wireless) are in the 4812 SIC Code (Radiotelephone Communications). In addition, three companies (Sanofi-Aventis, Wyeth and Flamel Technologies ) in the 2834 SIC Code (Pharmaceutical Preparations) were also sued for the first time in November. Other groups that saw significant activity in November, and that similarly have no relation to the subprime problems, include the 3663 SIC Code (Broadcasting and Communications Equipment) and the 1311 SIC Code (Crude Petroleum and Natural Gas), each of which had two new lawsuits in November. In other words, while subprime-related litigation activity is an important part of the increased filing levels, it is not the sole explanation. |
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