Finance Sector Main Target For Securities Suits: Study

Finance Sector Main Target For Securities Suits: Study - 7/20/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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Finance Sector Main Target For Securities Suits: Study
Jesse Greenspan

Securities Law 360. July 20, 2009
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EXCERPT: While the number of federal securities class actions has declined in 2009 from last year, particularly in the second quarter, financial services firms are being targeted at record-high rates, according to a study released Monday. The study, prepared by the Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research, found that 87 federal securities class actions were filed in the first half of 2009, a 22.3 percent decline from the second half of 2008 and an 11.7 percent decline from the semiannual average over the past 12 years. Only 35 filings were observed in the second quarter of 2009, the lowest quarterly total since the first quarter of 2007, the study found. However, the financial services sector is not getting any relief. Such companies were defendants in two-thirds of the filings from the first half of 2009, up from 50 percent of all filings in 2008, according to the study. Joseph Grundfest, director of the Securities Class Action Clearinghouse, said that when he first started tracking federal securities class actions, there was more litigation against the hi-tech sector, including the pharmaceutical and biotechnology industries. But when the economy began to go south in 2007, the number of class actions against financial services firms really went up, he said. “One explanation [for the decline in filings so far this year] is that the pool is being fished out, that they're running out of additional financial services firms that can be sued,” Grundfest said. He pointed out that all of the large firms in the sector have already been sued, and that only some of the smaller ones remain unscathed. Reduced stock market volatility, as well as the general decline in stock market values, could be another explanation for the lower number of filings, according to Grundfest.

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