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Cornerstone Research Report Highlights Trends In Securities Class Actions

The number federal securities class action suits filed in the first half of 2011 decreased compared to the second half of 2010. At the same time however the number of cases filed increased compared to the first half of 2010, according to a new report by Cornerstone Research (here). For the first half of 2011 there were 94 suits filed. That is below the 104 suits filed in the second half of 2010 but more than the 72 suits filed in the first half of 2010.

Securities class action filings in the first half of 2011 were driven by suits arising from M&A activity and those associated with Chinese issuers who conducted a reverse merger. In the first six months of the year 24 class actions were filed involving reverse merger cases. During the period 21 were associated with M&A activity. In contrast only two suits related to the credit crisis were brought.

If class action securities suits continue to be filed at the present pace, the report projects there will be a total of 190 cases brought in 2011. This is on par with the average number of filings from 1997 to 2010. However, if the number involving Chinese reverse mergers is excluded from the projection since there are only a finite number of these companies, only 165 filings would be made in 2011. That would be the second lowest number of suits brought during the period 1997 to 2010.

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For more cutting edge commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.

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