Securities Lawsuit Filings Soar, according to Advisen Report, sponsored by ACE.
Breach of fiduciary duty suits, many filed in state courts, led second quarter surge in filings.
New York (July 19, 2010) – Securities lawsuit filings leaped 30 percent in the second quarter, according to a new report by Advisen Ltd., sponsored by ACE. Every major category of securities suit, including securities class action suits, breach of fiduciary duty suits, securities fraud suits filed by regulators, and derivative actions, increased relative to the first quarter.
“Plaintiff attorneys seemingly took a breather in the first quarter,” noted Dave Bradford, Advisen executive vice president and the author of the report. “The second quarter was much more in line with the level of activity we’ve seen in the past several years. The nature of the activity was very different, though. For example, suits related to the credit crisis have fallen off sharply as compared to 2008 and 2009.”
Financial firms were targeted in many 2008 and 2009 credit crisis suits. Although credit crisis filings are sharply lower in 2010, financial companies continue to be sued more than companies in any other industry, accounting for 34 percent of second quarter filings. A spike in suits naming companies in the energy industry was triggered by the Deepwater Horizon oil spill and the Upper Big Branch mine disaster.
The most common type of securities suit filed in the second quarter was breach of fiduciary duty. This type of suit alleges that a company’s directors or officers violated a fiduciary duty owed to investors or other stakeholders, and often is brought by shareholders in the wake of a merger or acquisition. Many are filed in state courts. The second most common type of suit was securities fraud, a category defined by Advisen to be comprised principally of suits brought by regulators and law enforcement agencies. Securities class action suits were the third most common type of suit, accounting for less than 20 percent of the total.
“Prior to 2005 securities class action suits represented more than half of securities suits filed each year,” said Bradford. “They have been falling steadily as a percentage of securities suits filed, though they still tend to be the largest suits as concerns settlements. Four of the five largest settlements in the quarter were of securities class actions.”
Advisen’s latest report on securities litigation and its impact on the directors and officers liability (D&O) insurance market, Securities Litigation Surges Following a Quiet First Quarter, sponsored by ACE, can be downloaded for no charge from the Advisen Corner Store at http://corner.advisen.com/reports_topical_sec_lit_q12010.html.
Q2 Securities Litigation Webinar
ACE's Carol Zacharias, Integro’s Louise Pennington, Goodwin Procter’s Carl E. Metzger, Oakbridge’s Kevin LaCroix and Advisen’s Dave Bradford shared their insights into key trends and developments in securities litigation and the D&O market in Advisen’s Q2 Securities Litigation Webinar, sponsored by ACE, which was held on July 16, 2010. A recording of the one-hour webinar and a copy of the slides presented during the webinar are available from the Advisen Corner Store at http://corner.advisen.com/reports_topical_sec_lit_q12010.html.
Master Significant Case and Action Database (MSCAd).
Advisen tracks significant lawsuits filed against companies and their directors and officers in MSCAd. MSCAd is the most complete and accurate database of such cases, consisting of over 50,000 events and over $3.9 trillion in aggregate losses. Securities cases in MSCAd represent over 10,000 cases and over $120 billion in aggregate losses.
Advisen’s MSCAd covers a full range of securities cases, categorized by type. Information about suits and filing details are available for purchase at Advisen’s online store, Advisen Corner, at http://corner.advisen.com/reports_topical_sec_normal_home.html and available at no extra charge to Advisen members through their advisen.com logins. For more information please e-mail corner@advisen.com.
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