The Work

March 31, 2010 12:43 PM

Report: Securities Class Action Filings Fall in 2009

Posted by Brian Baxter

UPDATE: April 2, 12:50 p.m. This post has been updated with an revised version of PwC's annual securities litigation study in the second paragraph, as well as corrected figures for settlement value in the fourth paragraph from PwC.

Along with college basketball championships and the beginning of a new baseball season, March also signals the release of PwC's annual securities litigation report. The results are in for 2009, as the fallout from the economic crisis shifts from financial services to other industries.

According to the 50-page study, federal class action filings fell from 210 in 2008 to 155 last year. There were 51 filings directly related to the financial crisis in 2009, compared with 99 in 2008. It was the second straight year that financial services firms bore the brunt of new securities filings, and while the overall numbers decreased, PwC believes that plaintiffs lawyers are likely looking for new targets.

"Although 2009 saw a decline in the total number of federal securities class action lawsuits, neither financial services firms nor companies in other sectors should take this as license to drop their guard," said PwC partner Grace Lamont, head of the firm's securities litigation and investigations practice, in a statement announcing the results. "The decline may simply be a lull as the plaintiffs' bar refocuses following two years of intense financial crisis-related filings."

The number of securities class action settlements remained roughly the same, with 93 settlements occurring last year, as compared with 95 in 2008. Total settlement value decreased 21 percent in 2009 to $3.1 billion from $3.9 billion the year before, according to the PwC report. The settlement numbers differ from data reported on last week by sibling publication The National Law Journal, which cited a recent study by Cornerstone Research that found securities settlements rebounded slightly in 2009 after experiencing a significant decline in 2008. (The NLJ will analyze differences between the two studies in a story next week.)

PwC partners Lamont and Patricia Etzold compiled the report and received contributions from DLA Piper securities enforcement chair Deborah Meshulam, Gibson, Dunn & Crutcher national securities litigation cochair Jonathan Dickey, and Linklaters litigation partner Paul Alfieri.

PwC will host a luncheon to officially release the survey's results next Tuesday at The University Club in New York. In previous years, the PwC report has looked at cases arising out of the subprime crisis and subsequent flood of new securities filings that followed the ensuing economic meltdown that evaporated trillions in market value.

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