U.S. Class Action Securities Lawsuits On The Rise
Professor Joseph Grundfest spoke with Tom Hals of Reuters on the recent rise of class action securities lawsuits and the trend away from traditional fraud cases:
The number of class action securities lawsuits filed in U.S. courts rose in the past six months and there was a big spike last year in litigation over merger disclosures, according to a study released on Thursday.
Between July and December there were 104 federal securities class action lawsuits filed in federal courts, up from 72 filed in the first six months of 2010, according to a study by the Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research.
"The sharp increase in federal litigation alleging disclosure violations in M&A transactions suggests that plaintiff lawyers are scrambling for new business as traditional fraud cases seem to be on the decline," said Joseph Grundfest, the director of the Stanford Law School Securities Class Action Clearinghouse.
He attributed the spike to a strategy by plaintiffs lawyers looking for a way to exert control over merger-related lawsuits, which are usually filed in state courts.
He expected the trend to continue.