SECURITIES CLASS ACTION FILINGS INCREASE COMPARED TO LAST YEAR
The number of securities class actions filed in 2011 increased to 188 compared to 176 filings the prior year, according to a recent report from Cornerstone Research. That number is still below the average of 194 cases filed from 1997 through 2010. One large group of case is the 33 actions representing 17.6% of all securities class actions which are related to Chinese issuers listed on U.S. exchanges through reverse mergers. As the year progressed however, the number of these filings appeared to decline. A second large group of case were the 43 actions related to M&A activity. This appears to build on a trend which began in 2010.
Other key points indentified in the survey include:
- Stage of litigation: The survey analyzed the progress of securities class actions through the discovery process by taking a sample of cases from 1997 through 2011. Based on this sample 75% of the cases reached the motion to dismiss stage while only 8% reached a ruling on summary judgment.
- FCPA related cases: The survey also tracked the number of class actions related to FCPA investigations being conducted by the DOJ and the SEC. Since 1998 there have been 25 such actions filed. In 2011 the second largest number of these cases were filed. In 2005 the largest number of FCPA related cases were brought.
- Industry: In 2011 the largest number of cases was brought against companies in the telecommunications services industry. Over the years companies in the healthcare business have typically been a key target. Last year a number of securities class actions were brought against smaller health care companies.
- Whistleblowers: The new SEC whistleblower program received 334 tips. Most related to claims of market manipulation, corporate disclosures, financial statements and offering fraud. The data is only for seven weeks however.