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Securities Lawsuits Hold Steady But Below Average

Publication Date: 
January 19, 2012
The New York Times Dealbook
Michael J. De La Merced

Professor Joseph Grundfest spoke with Michael J. De La Merced of the New York Times Dealbook on the decreasing number of traditional securities fraud by US issuers.

While some commentators may believe that corporate America is awash in class-action lawsuits by angry investors, a new study to be published on Thursday suggests otherwise.

The number of federal securities lawsuits filed by investors alleging fraud at corporations remained mostly flat last year, according to the study, by Stanford University Law School and Cornerstone Research. But if it were not for litigation tied to mergers and initial public offerings of Chinese companies, courtroom battles by investors would be below the historical average.


"It’s only the growth of merger-related litigation, which has historically been brought in state courts, that inflates the aggregate statistics so that they even approach historic norms," Joseph Grundfest, a Stanford law professor, said in a statement.


"Taken together, these data suggest that there are far fewer claims of traditional securities fraud by U.S. issuers than has been the case since the mid-1990s," Professor Grundfest said.