Cornerstone Releases Midyear Report

Cornerstone Research (in conjunction with the Stanford Securities Class Action Clearinghouse) has released its 2013 midyear report on federal securities class action filings.

The findings for the first half of 2013 include:

(1) There were 74 filings, which was 16 percent higher than the second half of 2012 (but well below the historical average per six-month period). The increase is primarily the result of an increase in filings against technology and energy companies.

(2) Federal filings associated with M&A transactions remained at low levels. These actions now are being pursued primarily in state court.

(3) For filings in the years 2008 through 2010, a larger percentage of cases were dismissed than in prior years, with dismissal rates climbing significantly above 50%. One contributing factor, however, was the higher dismissal rates for M&A filings, which frequently were brought in federal court during this period.

Quote of note (Professor Grundfest – Stanford): “We are observing class certification challenges on the grounds that the fraud on the market doctrine should not apply. If this defense strategy is successful, and if the Supreme Court eventually backs away from the fraud on the market doctrine, then the class action securities fraud litigation market will likely shrink significantly. This potential evolution in legal doctrine likely represents the largest ‘risk factor’ for anyone trying to predict the future course of the securities fraud litigation market.”

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