|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
Securities Class-Action Lawsuits Rise 43%
Nathan Koppel
The Wall Street Journal. December 20, 2007
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It has been a better year for securities class-action lawyers. They have filed on investors' behalf 166 securities class-action lawsuits in 2007, a 43% increase over last year's filings, according to a joint study by Stanford Law School and Cornerstone Research that is due to be released in January. Securities class-action suits let investors band together to gain leverage to pursue big defendants. In these cases, investors who suffer losses typically claim executives misled them about a company's financial condition. The surge in filings this year was due largely to fallout in the subprime mortgage market. To date, 32 subprime class actions have been filed this year, mainly against mortgage companies and lenders claiming that they improperly inflated the value of their mortgage portfolios and failed to disclose that loans allegedly were based on faulty appraisals. Still, class actions filings this year will most likely drop below the ten-year historical average of 186 cases, not including this year. This kind of litigation is down in recent years, compared to the late 1990s, when filings topped 200 cases, because of a relatively stable stock market and increased federal oversight of corporate governance, lawyers say. Subprime cases may be "a one-time event that you don't expect will reoccur," says Stanford law professor Joseph Grundfest. "There is still a question about whether securities class actions are back," adds John Gould, of Cornerstone Research. But subprime filings should remain robust at least in the near term, says New York plaintiffs attorney Stanley Bernstein, who specializes in securities class actions. "Practically every day there are more companies announcing more write-offs in the multibillions of dollars," he says. "It's clear the situation has not revealed itself fully." |
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