Investor Lawsuits Rise 19% In '08
Professor Joseph A. Grundfest is quoted in USA Today about the newly released report by the Securities Class Action Clearinghouse. Read key findings from the report here. USA Today wrote:
Investors filed 210 federal securities class-action lawsuits in 2008, up 19% from 176 in 2007, according to Stanford Law School's Securities Class Action Clearinghouse (SCAC) and Cornerstone Research. Plaintiffs claim they've been wronged out of up to $856 billion, up 27% from 2007 and the highest in six years.
Nearly half the year's litigation is connected with investors' losses resulting from the credit meltdown, because 97 lawsuits have to do with the subprime and credit debacle, and 103 name financial firms as defendants. Securities class-action lawsuits have never targeted financial services firms so heavily, says Stanford professor Joseph Grundfest.
Allegations are very specific. Many financial cases claim banks understated the amount of toxic assets they owned and overstated their value, Grundfest says. Others allege banks made loans to consumers who they knew couldn't afford them. Another 21 were connected to the sale of bonds called auction-rate securities, that left many investors unable to access their capital when the market for the bonds dried up last year.