Cornerstone Research has released an updated report on post-Reform Act settlements of securities class actions through December 2004. The findings include:
(1) The value of securities class action settlements in 2004 was a record $5.5 billion (the previous record was $4.5 billion in 2000). Even excluding Citigroup’s $2.6 billion settlement of WorldCom-related claims, the year-to-year increase was substantial.
(2) For cases settled in 2004 (as compared to 2003), there was a 40% increase in the length of the class period and larger market capitalization losses. Cornerstone attributes this development to the fact that many cases settling in 2004 were originally filed during the bear market that began in 2000.
(3) Despite the increase in overall settlement values, more than 65% of all settlements in 2004 were for less than $10 million and approximately 80% were for less than $30 million.
Cornerstone’s press release on the study can be found here.
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