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Suits Versus Chinese Firms Drive Up Securities Cases .

Publication Date: 
January 20, 2011
The Wall Street Journal
Ashby Jones

Professor Joseph A. Grunfest is quoted in the following Wall Street Journal story on the increase in securities-fraud lawsuits against Chinese companies:

A spike in lawsuits against Chinese companies that have listed on U.S. exchanges contributed to a rise in securities-fraud cases in 2010, according to a new report.

There are two potential reasons for the increase in lawsuits against Chinese issuers, according to Joseph Grundfest, a professor at Stanford Law School.

"There's going to be a learning or adjustment process as Chinese companies adapt to different regulatory or disclosure regimes," he said. Another possibility, Prof. Grundfest said, is that some of these companies may be flouting U.S. rules.


Plaintiffs sought a total of 176 federal securities class actions in 2010, compared with 168 in 2009, according to the study, issued jointly by Stanford Law School and Cornerstone Research.


Prof. Grundfest emphasized that the "traditional" securities-fraud suits, in which investors allege that corporate fraud led to stock losses, were down in 2010. He said this was partly due to a decline in litigation related to the credit crisis.

"That wave is over," he said. "Plaintiffs class-action lawyers are looking for business elsewhere."