NU Online News Service, July 27, 3:41 p.m. EDT

The pace of federal securities class action filings was slower in the 2010 first half than in 2009, with filings on track to decline for a second consecutive year, an economic consulting firm said.

A new biannual trends report by NERA Economic Consulting--called "Trends 2010 Mid-Year Study" (http://www.nera.com/nera-files/PUB_Mid_Year_Trends_0710.pdf)--found that if the pace of filings to date continues, there will be a total of 202 federal securities class actions filed in 2010, down from 221 filings in 2009 and 248 filings in 2008.

There were 101 securities class actions fillings from January to June this year.

The report said the decline is due in part to a reduction in credit crisis-related filings, which averaged about three per month in the first half of 2010--less than half the rate observed in 2008 and the first half of 2009.

However, this decline, the report noted, was partially offset by an increase in the frequency of other types of filings, such as cases alleging breaches of fiduciary duty and cases filed against companies in the life sciences and technology sectors.

The British Petroleum oil spill in the Gulf of Mexico also produced new filings, the report said.

NERA's report found the average securities class action settlement in the 2010 first half was valued at $209 million, which is higher than any other year value.

According to NERA, this increase was largely due to the $7.2 billion Enron settlement that was finalized this past February.

Without that settlement, the report noted, the average value would be $24 million, down from the $42 million average in 2009.

In addition, the median settlement in the first half of 2010 surpassed 2009's $9 million value and crossed the $10 million mark for the first time, reaching $11.8 million, the report said.

The report attributed this to an increase in median investor losses, which reached $436 million in the first half of this year, the highest level since 1996.

NERA said the number of future filings and the value of future settlements could be reduced due to the Morrison v. National Australia Bank Supreme Court decision, which limits the extraterritorial reach of U.S. securities laws.

But the report noted that certain provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act could lead to an increase in securities class actions filings.

"Although the impact of the Morrison decision and the Dodd-Frank Act on securities class actions is difficult to predict, these new developments could potentially have a substantial effect on class action filings and settlements," said Robert Patton, a senior consultant at NERA, in a statement.

An earlier report by Advisen said that securities lawsuit filings--including securities class actions, breach of fiduciary duty, securities fraud and derivative actions--increased 30 percent from the first to second quarter of 2010, with breach of fiduciary duty as the most common suit filed.

Special Reports /

Securities Class Action Filings In Decline, Report Finds

Related Stories

Recommended For You