NERA Report Says Securities Class Action Filings At Or Above Historic Levels In 2012

NERA Report Says Securities Class Action Filings At Or Above Historic Levels In 2012

According to NERA Economic Consulting's mid-year 2012 report, securities class action lawsuit filings were at or above historical levels in 2012, and though average securities class action lawsuit settlements during the year's first half approached all times highs, the pace of securities suit settlements is "slowing down markedly." NERA's Report, which is entitled "Recent Trends in Securities Class Action Litigation: 2012 Mid-Year Review," can be found here. NERA's July 24, 2012 press release regarding the report can be found here. My own analysis of the first half filings can be found here.

According to the NERA report, and largely driven by merger objection cases, there were 116 class action lawsuit filings in the year's first half, which suggests an annualized rate of 232 filings. (Please see the note below regarding NERA's counting methodology.) This rate is slightly above the 217 average annual number of filings that NERA calculates for the period 1996 to 2011.

However, the report makes a point that I have also made on this site, which is that while the annual number of filings has fluctuated around the same annual figure since the mid-90s, the number of public companies has declined significantly. According to the NERA report, the number of publicly traded companies has decreased by about 45% since 1996, and so "the average company listed in the US is significantly more likely to be the target of a securities class action now than it was in 1996." This is an important observation that is often overlooked; all too often commentators, referring only to fluctuations in the absolute number of lawsuits, conclude that filings are up and down, without considering the relation of the number of filings to the potential number of lawsuit targets.

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Read other items of interest from the world of directors & officers liability, with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.

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