Legal News

The Securities-Fraud Tide Is Rising

By Nathan Koppel

In a year when so much is down: salaries, employment, Tiger Woods's market value, at least one business is on the rise: securities-fraud class actions.

Cornerstone Research today released its annual report on securities-fraud class action settlements. Shareholders last year pocketed $3.8 billion in settlements, a 35% increase over 2008. Not a bad haul, huh?

"We anticipate that as cases brought in conjunction with the 2008 stock market decline and surrounding credit-crisis issues are resolved, settlements are likely to continue to increase both in number and value," Laura Simmons, a professor at the William & Mary’s Mason School of Business and a Cornerstone advisor, said in a statement.

Here’s a copy of Cornerstone's report. (Click here for Bloomberg's write up on the report and click here for a Reuters piece.)

Here are some of the report’s high points (or low points, for those companies that had to pay securities-fraud damages):

There were a total of 103 settlements approved in 2009, up from 97 settlements in 2008

The average settlement value increased from $28 million in 2008 to $37 million in 2009.

The Ninth Circuit had the highest number (28) of settled cases, followed by the Second Circuit (22).

Who was the big law-firm winner? San Diego powerhouse Coughlin Stoia, which served as one of the lead counsel in 26% of the settlements, according on the report.

In a Bloomberg interview, Simmons noted perhaps one bit of good news for corporate defendants: the 2009 securities-fraud settlements took an average of four years to reach, up from a three-year average in earlier years.

"Economic conditions may be delaying settlements," she said.

Full post as published by Law Blog - WSJ.com on March 24, 2010 (boomark / email).