The number of securities lawsuits filed in 2010 was above the record number of suits filed in 2009. This was despite a slowdown of litigation related to the credit crisis. The number of new suits that can be connected to the recent credit crisis fell sharply in 2010. But the void was more than filled by suits related to mergers and acquisitions. There were also a number of lawsuits filed resulting from the Deepwater Horizon oil spill. These numbers were according to the latest quarterly review of securities litigation by Advisen Ltd., sponsored by Kaufman Dolowich Voluck & Gonzo LLP. The most significant trend, according to the report, was the continued growth of suits filed in both federal and state courts alleging breach of fiduciary duties by company directors. These suits typically are the result of a merger or acquisition.
The record number of lawsuits filed, 1,196, tops the previous record 1,171 suits filed in 2009. That was a year dominated by litigation arising from the credit crisis, according to Advisen. While the total number of securities-related suits increased in 2010, the number of securities class action suits fell sharply. There were 193 as compared to 233 in 2009. Securities class action suits accounted for more than one third of securities suits filed prior to 2006, but represented only 16% of the 2010 total. Securities fraud suits, a category defined by Advisen to consist principally of suits brought by regulators and law enforcement agencies, made up 34% of the total.
Breach of fiduciary duties suits were a close second with 33% of all securities suits filed in the year, and led all other categories of suits by the fourth quarter. There have been fewer credit crisis suits filed, which accounts for the decrease in securities class action suit filings. The number of shareholder derivative suits was up in 2010, as was the number of so-called merger objection suits alleging breach of fiduciary duties.
Source: Insurance Journal
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