The number of federal class action suits filed last year grew 19%, according to a recent report. There were 210 suits filed nationwide, compared to 176 in 2007 and 116 in 2006, according to an annual survey conducted by the Stanford Law School Securities Class Action Clearinghouse in cooperation with Cornerstone Research. Of the federal actions filed last year, 97 were associated with the subprime-liquidity crisis. This “wave” of litigation against financial services companies is certainly justified.
The study noted that nearly a third of all S&P-500 financial firms had been sued, a total of 103 suits, up from 52 – 9.4% of the total – in 2007. Overall, 9.2% of companies on the S&P index were sued, compared to only 5% in 2007, the study says. Federal courts in the 2nd U.S. Circuit Court of Appeals led the nation in lawsuits against all defendants and also recorded largest percentage increase. There were 92 filings in the circuit, up 58.6% from the 58 of 2007 and 112% from the ten-year average of 42. Eighty-five of the Circuit cases were in the Southern District. The study only included complaints filed before December 15th, but 16 additional cases were filed nationwide between then and the end of the year. Eight were in the Southern District, of which six were related to the $50 billion Bernard Madoff Ponzi scheme.
According to the data, securities class action filings saw a “marked increase” because of subprime and liquidity crisis litigation starting at the end of 2007. Subprime and liquidity crisis-related suits first appeared in 2007, with 39 filings. There were 76 such filings in 2008. An additional 21 suits were filed over auction-rate securities, the first time such actions have been broken out by the survey. The first wave of lawsuits arose out of the mortgage and subprime liquidity crisis. Then a second wave involved auction-rate securities cases.
Source: New York Law Journal
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.