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Posts Tagged ‘credit crisis’

A few weeks ago, I posted a link to a Cornerstone Research report concluding that securities class action settlements were at a 10-year low.  Yesterday, securities litigators Daniel Tyukody and Gerald Silk posted an article in the New York Times DealBook blog entitled Understanding the Dip in Class-Action Securities Settlements with some insights explaining the downturn.  Among the explanations are lower starting inventory, the added size and complexity of credit crisis-related lawsuits, increased legislative and judicial scrutiny over securities class actions, and a decline of financial restatements by companies.  The article is a must read for anyone interested in understanding US securities class action trends.

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Jaclyn Jaeger of Compliance Week authored a comprehensive article published yesterday highlighting trends in credit crisis-related securities class action lawsuits.  The article summarizes a June 15, 2009, NERA Consulting report entitled “An Update on the Credit Crisis Litigation: A Turn Towards Structured Products and Asset Management Firms.”  Here is a link to the article, which in turn includes a link to a .pdf version of the NERA report. 

The report finds that credit-crisis-related lawsuits exploded in 2008, increasing 172% over 2007.  So far in 2009, filings appear to be continuing at a similar pace from 2009.  The report also notes an increase in cases that name officers and directors as defendants and an increase in the percentage of cases filed by non-shareholder plaintiffs.  Asset management firms and securities issuers and underwriters continue to be the target of the largest number of suits with only a small percentage of cases filed against mortgage lenders, home builders, insurers, and other defendants. 

The filing statistics only tell part of the story, however.  The report also provides preliminary statistics on the outcomes of cases, finding that almost two thirds of recent resolutions involved either an outright dismissal, partial dismissal, or voluntary dismissal.  15% resulted in settlements, while 21% survived motions to dismiss.

For anyone interested in tracking the litigation arising from the credit crisis, both the article and the NERA Consulting report are a worthwhile read.

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