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Securities class action filings remained somewhat steady in 2011, largely due to a surge in two types of lawsuits - those filed against Chinese companies listed on U.S. stock exchanges and those linked to mergers and acquisitions, according to a pair of reports at year's end. The two studies - one by NERA Economic Consulting and the other by Stanford Law School and Cornerstone Research - both found that the number of new lawsuits alleging "classic" securities fraud against major U.S. companies declined last year when compared to historical averages. Based on figures compiled through November, NERA projected 232 securities class action filings for all of 2011, a number it called "broadly in line" with numbers for the previous three years. NERA pointed out, however, that approximately 29% of the new cases were filed in objection to mergers and acquisitions, while another 18% targeted Chinese companies listed on U.S. exchanges through so-called "reverse mergers." "While the annual number of filings has not varied a great deal over the past several years, the mix of cases filed has changed substantially," the authors of the NERA report said. The Stanford-Cornerstone study, meanwhile, logged 188 federal class action filings in 2011, up from 176 new cases the previous year. New filings continued to lag the historical average of 197 filings per year from 1997 to 2010, the Stanford-Cornerstone researchers said. The Stanford-Cornerstone researchers also concluded that the 2011 numbers were driven by an increase of lawsuits related to mergers and acquisitions (22.9%) and against Chinese issuers (17.6%). But they added that cases against Chinese companies appeared to be waning by the second half of the year, the report said. If Chinese-issuer lawsuits turn out to be a short-lived filing trend, they would join other circumstance-driven phenomena, such as IPO allocation lawsuits associated with the dot-com bubble that burst in 2000, options backdating filings and auction-rate securities filings. The Stanford-Cornerstone report also tracked the resolutions of cases filed since 1996, though it limited its sample to "classic" securities class actions. In looking at resolved cases, researchers found that 51% of cases resulted in a settlement, either prior to a judicial ruling on defendants' motions to dismiss (16%) or after the initial ruling (35%). Another 40% resulted in dismissal, either voluntarily by plaintiffs (9%) or as a result of a favorable ruling on defendants' motion to dismiss (32%). The final 8% of resolved cases reached a ruling on summary judgment or beyond. |