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Securities Class Action Complaints Fall In First Half Of Year

Publication Date: 
August 04, 2011
Marlene Y. Satter

A commentary by Professor Joseph Grundfest is featured in the below AdvisorOne article on how a higher degree of cooperation between the Chinese and American judicial systems may be needed to address the problem of Chinese reverse mergers.

Federal securities class action complants were down in the first half of 2011, according to Securities Class Action Filings—2011 Mid-Year Assessment, released July 26. Although overall activity was down, filings on Chinese reverse mergers and M&A activity rose over the last six months of 2010.

The report, prepared twice a year by the Stanford Law School Securities Class Action Clearinghouse in cooperation with Cornerstone Research, showed that in the first six months of 2011, 94 federal securities fraud class actions were filed. That is a 9.6% decrease from the second half of 2010, in which 104 filings were recorded.


In a commentary on the increase in Chinese reverse merger filings, Joseph Grundfest, director of the Stanford Clearinghouse, said, “The new kid on the block is the claim alleging that Chinese-based issuers have made false financial statements. The question remains as to whether or not this litigation will lead to meaningful recovery for plaintiffs. If plaintiffs successfully obtain large judgments in American courts, they may not be able to enforce their judgments against Chinese assets held by Chinese defendants in China.”

He added, “Addressing the problem of Chinese reverse mergers may require a higher degree of cooperation between the Chinese and American judicial systems than has ever occurred in U.S.–China relations.”