The collapse of subprime mortgage investments is driving thenumber of shareholder class-action filings back up after a declineof such filings in 2005 and 2006, according to two recentreports.

One report released by NERA Economic Consulting, called "2008Trends: Subprime and Auction-Rate Cases Continue to Drive Filings,and Large Settlements Keep Averages High," said filings are on paceto reach almost 280 for the year.

Cornerstone Research's report, "Security Class Action Filings:2008 Mid-Year Assessment," projects 220 such filings if the ratecontinues at its current pace.

From July 2005-June 2007, the Cornerstone Research study added,the filings were 38.2 percent below the average for the nine yearsending June 2005.

The NERA study said, "Clearly, the current subprime and creditcrisis is a major factor in the recent surge in shareholderclass-action filings. In 2008, 51 percent of filings through June30 have allegations related to the subprime collapse."

The Cornerstone Research study noted that 58 of the 110first-half 2008 filings contained allegations relating to thesubprime mortgage/credit crunch.

Both studies agreed that market volatility is also playing arole in the increased number of filings in 2008. The CornerstoneResearch study found that "filings jumped from 119 in the 12 monthsending June 2007 to 217 over the next 12 months, and stock marketvolatility doubled over the same period."

The NERA study also noted that class-action filings are likelyfollowing a large drop in a company's stock. "We find that theprobability of a filing over the three months following such pricedrops increases with the size of the drop," said the study.

It also commented that recently filed cases may result in largesettlements because of high investor losses stemming from thesubprime crisis.

The study said that "investor losses–a powerful determinant ofsettlement size–for cases filed in the first six months of 2008have a median value in excess of $800 million, substantially higherthan the approximately $350 million median for cases settled in the2005-2007 time frame."