Securities Class Actions Drop

Federal securities class action activity in the first six months of 2010 dropped to the lowest semiannual level since the first half of 2007, according to a report from Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research.

A total of 71 federal securities class actions were filed in the first half of 2010, a 15.5 percent decline from the 84 filings in each half of 2009. The decline in filings is associated with a decrease in credit crisis-related litigation, which accounted for only eight filings in the first half of 2010 compared with 37 filings in the first half of 2009 and 16 filings in the second half of 2009.

The financial sector continues to be a focus of plaintiffs’ attention. Financial companies were defendants in 29.6 percent of the filings in the first half of 2010. According to Standard & Poor, 5.1 percent of the S&P 500 companies in the Financials sector were named as defendants in federal securities class actions in the first half of 2010, representing 17.5 percent of that sector’s market capitalization.

If the filing rate for the first half of the year continues, there will be a total of 143 filings in 2010, the second lowest annual number of filings since 1997.

More details on Stanford's securities class action suit research is available from the Silicon Valley/San Jose Business Journal.