NERA releases 2011 review of securities class action litigation

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April 24, 2012

NERA Economic Consulting released their wrap up of last year’s securities class action litigation. According to NERA’s 2011 report, federal securities class actions continued on a steady path last year in comparison to the previous three years.  A relation between the most common allegations for each case and the types of cases has become apparent. Breach of fiduciary duty and accounting allegations were the most common in 2011, while the two most common types of suits involved merger & acquisitions and U.S.-listed Chinese companies. Accounting allegations were the major cause of suits against Chinese issuers, while breach of fiduciary duty allegations were cause for the rise in M&A objection lawsuits.
Among breach of fiduciary duty and accounting allegations, misleading earnings guidance and other product/operational defects were also prominent last year. Allegations concerning defects of financial products consisted of only 5% of the total number of cases filed in 2011. This is a significant decrease from the 15% of cases that was recorded in 2007-2009 as a result of the financial crisis.

2011 saw a decline of credit crisis-related lawsuits, which were responsible for the majority of securities class action cases in years past. The number of credit crisis suits involving mortgage-backed securities and collateralized debt obligations has returned to levels last seen five or six years ago. This decrease can be tied to the progress made of addressing a backlog of such cases, as well as the statute of limitations being reached in these types of cases.

NERA 2011

According to NERA’s report, 2011 was most notably marked by the increase in cases filed against U.S.-listed Chinese companies and M&A-related lawsuits. It seems as though the wave of credit crisis cases has crested, as fewer of these cases are expected in the future. A positive trend for institutional investors looking to recover class action settlement dollars, 2011 marked the third highest median settlement value on record. By partnering with a securities class action recovery service provider like Financial Recovery Technologies (FRT), you can be assured your firm capitalizes on all potential settlement dollars it is likely to receive. The trends indicate that securities class actions will continue with a steady stream of litigation, increasing the pool of available recovery funds.

Contact FRT today to learn more about how we can be of service to your organization.

Click here to read NERA’s Recent Trends in Securities Class Action Litigation: 2011 Year-End Review.

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