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Securities Class Action Filings Increase Slightly in 2011
Class Action |
2012/01/20 10:10
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Federal securities fraud class action filing activity increased slightly in 2011, according to Securities Class Action Filings—2011 Year in Review, a semiannual report prepared by the Stanford Law School Securities Class Action Clearinghouse in cooperation with Cornerstone Research. A total of 188 federal securities class actions were filed in 2011 compared with 176 filings in 2010, with an equal number of actions (94) being filed in the first and second halves of the year. The number of class actions filed was 3.1 percent below the annual average of 194 filings observed between 1997 and 2010.
Consistent with a trend first observed in 2010, filings related to merger and acquisition (M&A) transactions continued to constitute a large percentage of total filings, accounting for 22.9 percent of 2011 activity. There were 20 such filings in the first half of 2011 and 23 filings in the last six months of the year. In 2010, M&A filings constituted 22.7 percent of all filings.
Litigation against Chinese issuers listed on U.S. exchanges through reverse mergers represented a major component of filings activity during 2011, although evidence indicates that this type of litigation is subsiding. In 2011, 33 such actions were filed, constituting 17.6 percent of all federal securities class actions. This activity occurred predominantly in the first half of the year, when 24 of these actions were filed; only nine were brought in the last six months, including five filed in the last three months of the year. In contrast, there were only nine such cases filed during 2010, suggesting both a rapid peak and decline in this type of litigation activity. Compared to other class action securities fraud complaints, Chinese reverse merger filings are more likely to allege violations of generally accepted accounting principles and financial restatements and are less likely to allege insider trading. |
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Class action or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon, at least the U.S. variant of it. In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule. Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have civil procedure systems which deviate significantly from the federal rules; the California Codes provide for four separate types of class actions. As a result, there are two separate treatises devoted solely to the complex topic of California class actions. Some states, such as Virginia, do not provide for any class actions, while others, such as New York, limit the types of claims that may be brought as class actions. They can construct your law firm a brand new website, lawyer website templates and help you redesign your existing law firm site to secure your place in the internet. |
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