|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
Credit Crisis Cases Spur Shareholder Class Action Filings To Highest Level in Six Years, Median Settlement Values Remain Steady––But For How Long?
Staff Writer
Business Wire. December 18, 2008
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EXCERPT: The ongoing credit crisis and turmoil in the financial sector have fueled a major surge in securities class action litigation in 2008, according to a new study from NERA Economic Consulting. 12/18/2008Filings are projected to reach 267 by year’s end, which would represent a 37% increase over 2007 and the largest annual total since 2002. Excluding atypical cases (related to the IPO securities litigation, analyst cases, and mutual fund market timing), filings in 2008 are on pace to reach a 10-year high. According to NERA's study, 2008 Trends in Securities Class Actions, the credit crisis is the most significant factor contributing to the increase, continuing a trend that began in 2007. Of the 255 cases filed as of 14 December 2008, 43% or 110 are related to the credit crisis, nearly tripling from 40 in 2007. Settlement Values Remaining Steady—For Now While filings have steadily increased from 2006 through 2008, median settlement values have remained relatively stable. The 2008 median settlement resolved for $7.5 million, below the 2007 median of $9.4 million, and above the 2006 median settlement of $7.0 million. Although it is too early to tell what impact the surge in credit crisis filings may have on future settlement values, there are two intriguing hypothetical outcomes, according to study co-author Dr. Stephanie Plancich. Historically, large investor losses have been positively correlated with a larger settlement size, and the median investor loss for a credit crisis case in 2008 is almost $3.5 billion—approximately nine times the median amount of a non-credit crisis case filed this year ($387 million). This suggests that average and median settlement sizes could grow in the future as these cases begin to be resolved. "On the other hand," says Dr. Plancich, "defendants with 'deep pockets' are the ones who can afford big settlements. |
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