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Securities-Fraud Filings Up In 2007

Publication Date: 
January 08, 2008
Daily Journal
Gabe Friedman

The Daily Journal ran a story on the recent report from Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research that 166 securities-fraud class actions were filed nationwide last year--a 43 percent increase from 2006. Professor Joseph A. Grundfest is quoted as a "leading contributor to this study, which was released last week. In mid-2007, Grundfest suggested a 'permanent' shift in the marketplace would cause filings to continue to decline."

Instead of abandoning that theory "Grundfest attributed the recent surge to the subprime morass, which he characterized as a one-time event. In his terms, the "core" rate of litigation, which excludes nonrecurring events, remains low."

"If you look at the core rate of litigation, it's down," he said. "And it's down because a large part of the bump-up is because of subprime."

The core rate of litigation for 2007 would include 126 suits as compared to an annual average of 192 suits from 1997 to 2006, according to Grundfest. Past nonrecurring events considered by Grundfest include the initial public offering laddering cases, the mutual-fund timing and fee cases and the stock-option backdating cases.