An Advisen Quarterly Report
Q2 2011 Regulatory Actions Ease as Overall Securities Litigation Remains Active
Sponsored by Anderson Kill & Olick, P.C.
Since the onslaught of the credit crisis, suits against financial services firms, particularly regulatory actions, have been filed at a fevered pitch. In the second quarter of 2011, the fever may have finally broke, as both overall regulatory actions and lawsuits filed against financial services firms have slid back to pre-credit crisis level. At 332 securities suits filed in Q2 2011, new filings are down from the high of 398 in Q1, but the annualized level remains on par with the record-setting year of 2010. The falloff in overall new filings from Q1 to Q2 resulted from the falloff in regulatory actions against financial services firms, at levels unseen since the pre-credit crisis year of 2006.
Securities fraud cases, mostly regulatory actions, remained a leading type of new securities-suit filings, but government prosecutors' activities seemed to ease a bit against financial services firms. This easing also occurred with FINRA (Financial Industry Regulatory Authority) violations, measured separately from securities fraud cases. Securities class action suits continued to represent a lower percentage of all securities suits filed in the second quarter compared to years past, but remained at a level higher than in 2010 and flat with Q1 2011. Breach of fiduciary duties suits have become litigators' bread-and-butter in recent years, and was by far the leading type of new filings. Most of these lawsuits - so-called merger objection suits - are filed by shareholders who allege that a company's board of directors sold, or planned to sell, a company at terms unfavorable to the shareholders.
The results of this quarter were nearly the same as the previous quarter across suit types, except for the falloff in regulatory actions. Globalization has had a substantial impact on securities litigation in 2011, particularly in Q2, with filings against non-U.S. companies reaching 20 percent in the quarter. Suits filed against companies from China represented about half of these suits.
Advisen Webinar: Second Quarter Securities Litigation Review
sponsored by Anderson Kill & Olick
Tuesday, July 19, 2011. 11:00am - 12:00pm EDT
The most recent quarter has been active for followers of Securities litigation. The growth in litigation against Chinese companies has continued unabated. Also, more mergers have created surprise - more objections! Canada is emerging as a perplexing venue for securities litigation, too. Finally, the Supreme Court has now weighed in on three important cases that bear discussion.
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