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Securities Class Actions Inched Up In 2010

Publication Date: 
January 19, 2011
The National Law Journal
Karen Sloan

Professor Joseph Grundfest and the Stanford Securities Class Action Clearinghouse are both mentioned in the following article on federal securities class action filings. Recent reports by the Clearinghouse found that the filings slowed down in 2010. Professor Grundfest comments on the Clearinghouse's findings:

2010 was a relatively slow year for federal securities class action filings, according to the latest research from the Securities Class Action Clearinghouse ­ a partnership between Stanford Law School and Cornerstone Research.

There were 176 filings throughout the year, a slight increase from the 168 filings in 2009 but nearly 10% below the average from the previous 13 years. Filings were significantly slower in the first half of the 2010 but picked up later in the year.

The past year saw a surge in the number of class action filings resulting from alleged disclosure violations in mergers and acquisitions. That number rose from seven in 2009 to 40 in 2010. The report points out that the 20% increase in merger activity last year does not alone explain the much larger increase in M&A securities class action filings.

"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. "There is little reason to believe that this trend will reverse or slow down; if anything, plaintiff lawyers may well bring an increasing percentage of these claims in federal court in an effort to control the litigation and share in any fees that may result."