U.S. Securities Class-Action Suits Rise, Big Supreme Court Case Looms
The Chicago Tribune quotes Professor Joseph Grundfest on possible Supreme Court rulings regarding class-action lawsuits.
Investors are pursuing more lawsuits accusing companies of fraud, according to a new study, but filings may plunge if the U.S. Supreme Court decides soon to remake the legal landscape.
Plaintiffs filed 166 federal securities lawsuits seeking class-action status in 2013, up 9 percent from 152 in 2012, according to data released Tuesday by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse.
A narrowing or overruling of Basic could have "seismic" implications, said Joseph Grundfest, a Stanford law professor who works with Cornerstone and a former commissioner of the U.S. Securities and Exchange Commission, in an interview.
"If the court heightens the showing that plaintiffs must make to establish reliance, then all bets are off," Grundfest said. "It could become impractical to certify a large number of class actions, because it would require a showing that each individual member of the class relied on misrepresentations."
Grundfest said such settlements could become harder to come by if the Supreme Court narrowed or overruled Basic. "There would be a very large push by plaintiffs' lawyers and perhaps even the SEC to have something done in Congress," he said.