U.S. securities class action filings down sharply in 2012

Facebook LinkedIn Twitter Court approves data breach settlements with BMO, CIBC Universal life policies can’t be used for unlimited deposits, appeal court rules The decrease in total filings was largely due to declines in suits over mergers and acquisitions, and Chinese reverse takeovers, it notes. There were only 23 of these sorts of filings in 2012, compared with 74 in 2011. “These waves of cases are most likely over, and future filings of these types are likely to remain at very low levels,” it notes. Additionally, 2012 was the first year in which there were no new filings related to the credit crisis, it says. Indeed, filings involving the financial sector continued to decrease, with 15 filings in 2012, compared with 25 in 2011, and 43 in 2010. The most active sector for class actions is the consumer non-cyclical sector, it reports. And, of the 49 filings in this sector, 33 were against healthcare, biotechnology, and pharmaceutical companies, it says. The report also observes a continued decline in filings targeting very large companies. It says that an analysis of S&P 500 companies named as defendants in securities class actions shows that only one out of every 29 was the subject of a new filing in 2012, making 2011 and 2012 the least litigious for S&P 500 companies in the past 13 years. “What stood out in 2012 was the absence of a filing trend that influenced the total number of new cases. In the past there have been observable filing types, such as IPO cases, options backdating, mergers and acquisitions, or most recently, Chinese reverse mergers. But 2012 was not dominated by any such trend,” notes Dr. John Gould, senior vice president of Cornerstone Research. However, professor Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse, suggests that the new whistleblower program implemented by the U.S. Securities and Exchange Commission (SEC) could yet prove to be a source of future class action suits. “The SEC claims that the Dodd-Frank bounty program has helped it build a large inventory of high-quality leads as to fraud at publicly traded corporations,” he notes. “But will the commission be able to transform these leads into quality enforcement actions? And, will private-party plaintiffs be successful in prosecuting ‘piggyback’ claims that copy the commission’s complaints?” “The current quiet patch in private securities fraud litigation could certainly be unsettled if the Dodd-Frank bounty program generates a new wave of private claims,” he adds. Related news Federal securities fraud class action filings in the U.S. dropped sharply in 2012, according to a new report from Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse. The report says that only 152 federal securities class actions were filed in 2012, compared with 188 in 2011; and, that this represents the second-lowest number of annual filings in 16 years. Bitcoin surge doesn’t affect damages, B.C. court says Keywords Lawsuits James Langton Share this article and your comments with peers on social media

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