U.S. Securities Litigation Falls; Non-U.S. Rises: Study

U.S. Securities Litigation Falls; Non-U.S. Rises: Study - 7/20/2009

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U.S. Securities Litigation Falls; Non-U.S. Rises: Study
Zack Phillips

BusinessInsurance.com. July 20, 2009
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EXCERPT: U.S. securities litigation has decreased so far this year, although the number of lawsuits against foreign-based financial firms has risen significantly, according to a survey. The midyear assessment by the Palo Alto, Calif.-based Stanford Law School Securities Class Action Clearinghouse and Boston-based Cornerstone Research found 87 security class action filings against U.S. companies in the first half of 2009, a 22.3% drop compared with 112 in each half of 2008. In addition, the second quarter of this year saw the least amount of securities litigation since the first quarter of 2007, and the 2009 figures are 11% below the average for the past 12 years, the report said. Financial service firms continue to be the dominant focus of litigation, with 66.7% of the first half of 2009 lawsuits being filed against such firms, up from 50% in all of 2008, according to the report. “Securities litigation activity continues to be driven by claims against financial services firms, but all the large firms in the industry have already been sued,” Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse, said in a statement. “Plaintiffs are therefore filing claims against the smaller number of smaller financial services firms yet to be sued.” Such lawsuits historically have occurred mostly against U.S.-based firms, but the amount of litigation against corporations based outside the United States has been increasing during the past decade and in recent years. While non-U.S. firms have seen an average of 18 securities lawsuits a year since 1997, plaintiffs already have filed 18 suits in the first half of this year and filings are on pace to eclipse the record 31 filings in 2008, the report said. More than three-quarters of the securities suits brought against firms outside the United States are against financial service firms, according to the report.

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