Mergers & acquisitions, U.S.-listed Chinese companies, and credit crisis litigation among the top securities class action stories in 2011
Mergers & acquisitions, U.S.-listed Chinese companies, and credit crisis litigation among the top securities class action stories in 2011
The close of 2011 was marked by several trends in regards to securities class action litigation. The three most prevalent issues involved were mergers & acquisitions (M&A), U.S.-listed Chinese companies, and subprime and credit-crisis lawsuits, according to Kevin LaCroix of the D&O Diary. Other noteworthy topics in the arena of securities class actions include whistleblower lawsuits and foreign investors seeking litigation outside of U.S. jurisdiction.
The bulk of securities class actions have shifted from the traditional securities litigation to focus more on corporate actions. When considering both federal and state lawsuits, the number of litigations surrounding mergers & acquisitions has surpassed federal securities lawsuit filings. M&A cases are generally settled quickly by corporate defendants and can result in significant fees for plaintiff attorneys, making these types of cases increasingly popular.
In another trend, U.S.-listed Chinese companies have come under fire since 2010, most notably with cases brought against 39 different Chinese organizations in 2011. Litigation against U.S.-listed Chinese companies represented roughly 20% of all securities class action cases filed in 2011. Litigation against these companies is primarily driven by a response to questionable accounting practices. As LaCroix points out, “the recent litigation against the U.S.-listed Chinese companies is a reminder of circumstance-specific events that can drive securities class action lawsuit filings.” It is hard to judge the cause or level of activity involving securities class action litigation, which serves as further proof that keeping up on class actions requires a well-advised resource.
There are numerous lawsuits involving subprime and credit-crisis issues that have yet to be resolved. The most notable aspect of subprime and credit-crisis litigations is the settlement amounts, which rank among the highest of settlements in 2011. Some examples include the $627 million Wachovia bondholders settlement, the $315 million Merrill Lynch Mortgage Backed Securities settlement, and the $417 million Lehman Brothers offering underwriters settlement. While the number of cases filed involving the credit-crisis has waned, the backlog of unsettled cases presents the opportunity for substantial settlement recoveries.
It seems that securities class action litigations will continue to remain significant going forward. It is important for you and your organization to have a method to addressing class action claims in order to receive all of the settlement funds that you are entitled to receive.
Contact FRT today to find out more about our proprietary technology platform and processes that will help ensure your firm sufficiently addresses securities class actions.
Read Kevin LaCroix’s article for an overview of 2011 securities class action trends.