Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse have released a report on federal securities class action filings in 2007. The findings include:
(1) There were 166 filings in 2007 (as of 12/17/07). Note that there is a significant difference between the Cornerstone (166) and NERA (198) totals over the same time period. Both numbers, however, represent a large increase over the number of filings in 2006.
(2) The report is skeptical that the increase in filings suggests a trend back to historical filing levels, noting that 32 of the filings were related to the subprime crisis. Increased stock market volatility in the second half of 2007 also may have played a role in the increase.
(3) Because of subprime-related litigation, filing activity in the financial sector nearly quadrupled to 47 filings (as compared to 11 filings in 2006).
(4) The report examines the outcome of post-PSLRA cases in Cornerstone’s database (2,646 cases). The report finds that of the resolved cases, 41 percent were dismissed and 59 percent settled.
The press release announcing the issuance of the report can be found here. The D&O Diary has an interesting post breaking down the 2007 statistics and challenging some of the report’s conclusions.
Quote of note (press release): “Professor Grundfest commented that ‘the JDS trial is an important landmark in modern securities litigation. These cases rarely go to trial, and for the defendants to win a total victory in a case that claimed $20 billion in damages demonstrates that not every case that makes it past summary judgment has merit. The interesting question is how and whether this trial result might cause plaintiffs to modulate their settlement demands or embolden defendants to take cases to trial.'”