Advisen Topical Report:
Securities Litigation Activity Dips: An Advisen Quarterly Report- Q3 2011
Perhaps it's a new dawn, as the business community begins to wake from the slumber, and nightmares, of the credit crisis. Or perhaps it's the morning calm before the sun once again rises to shine its light on the next scandal. The credit crisis brought about a rise in litigation activities for all major types of securities suits. After a record first quarter, however, new filings in 2011 demonstrated a steady drop for most types of suits, falling to a pre-2009 level in the third quarter, as 2009 was when credit crisis-related suits began to mushroom. At 316 securities suits filed in Q3 2011, new filings are down from 367 in Q2 and the high of 421 in Q1. The falloff in new filings from Q1 through Q3 resulted initially from the falloff in regulatory actions against financial services firms in Q2, then Q3 saw a sudden drop-off in breach of fiduciary duties cases. Despite these figures, the record-setting first quarter leaves 2011 thus far at an annualized level higher than all previous years, and Q3 annualized was greater than all years prior to 2009. This suggests that post-credit crisis events remain at an elevated plateau even if new filings for the third quarter dipped below the recently established levels.
Securities fraud cases, mostly regulatory actions, became once again the leading type of new securities-suit filing in the third quarter, but government prosecutors' activities remained significantly below the first quarter's level over the past two quarters, and at an annualized rate last seen in 2008. Securities class action suits, although down from the previous two quarters, had a bit of a comeback as far as percentage of total suits filed. Breach of fiduciary duties suits became litigators' bread-and-butter in recent years, and the level remained higher than other types of private litigation, but dropped substantially in the third quarter. Most breach of fiduciary duties suits are so-called merger objection suits, which 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.
Globalization has had a substantial impact on securities litigation in 2011, particularly in Q2, with filings against non-U.S. companies reaching 19 percent in the quarter. New filings against non-US companies remained historically high in Q3, but down from the blistering pace of new suits witnessed in the previous quarter, dipping to 15 percent in the quarter. Suits filed against Chinese companies represented about 30 percent of these suits in Q3, but down from over 40 percent in the previous quarter.
Advisen Webinar- Q3 Securities Litigation
Thursday, November 17, 2011 at 11:00AM- 12:00PM EST
Perhaps it's a new dawn, as the business community begins to wake from the slumber, and nightmares, of the credit crisis. Or perhaps it's the morning calm before the sun once again rises to shine its light on the next scandal. The credit crisis brought about a rise in litigation activities for all major types of securities suits. After a record first quarter, however, new filings in 2011 demonstrated a steady drop for most types of suits, falling to a pre-2009 level in the third quarter, as 2009 was when credit crisis-related suits began to mushroom. At 316 securities suits filed in Q3 2011, new filings are down from 367 in Q2 and the high of 421 in Q1. Despite these figures, the record-setting first quarter leaves 2011 thus far at an annualized level higher than all previous years, and Q3 annualized was greater than all years prior to 2009.
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