Fewer lawsuits related to the global credit crisis contributed to the decrease in the number of federal securities class actions in the first half of this year, according to two separate studies.
A report by Stanford Law School and Cornerstone Research entitled “ Securities Class Action Filings – 2010 Mid-Year Assessment,” stated Wednesday that a total of 71 federal securities class actions were filed in the first six months of the year. That represents a 15.5% drop from the 84 filings in the first half of 2009, the report said. Only eight filings were related to the credit crisis.
However, the financial sector continued to attract the most litigation. Financial companies were defendants in 29.6% of the filings in the first six months of 2010, the report said.
Another similar report from New York City-based NERA Economic Consulting released Tuesday put the number of federal securities class actions at 101, primarily because the Stanford study excluded cases involving initial public offering allocation, analyst and mutual fund filings.
The NERA study also indicated the median settlement was at a “record high” of $11.8 million, blasting past the $9 million mark set last year by nearly one-third and passing $10 million for the first time. The $7.2 billion settlement in February by energy company Enron Corp., was a major factor in that record number, according to the study.
At the same time, NERA said, “ a rise in median investor losses may be part of what is driving the increase in the median settlement.” In fact, NERA said that median investor losses hit $436 million, “the highest level in any year since the  enactment of the Private Securities Litigation Reform Act.”
Both studies also cited a drop in the number of class actions alleging Ponzi schemes, which were a large source of new filings in December 2008 and through 2009.
Finally, the plaintiffs’ bar is faring well when it comes to fees and expenses awarded in settlements. In fact, the NERA study said, in the first half of this year, plaintiff’s counsel have been awarded a total of $902 million in fees. At this pace, that number will likely near the 2007 record when attorneys who bring class actions were awarded a collective $1.525 billion in fees, NERA stated.
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