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September 19, 2014

September 18, 2014

2012 Trends in Securities Class Action Filings

On January 23, Cornerstone Research and Stanford Law School’s Securities Class Action Clearinghouse released their “2012 Year in Review” report, which analyzes the federal securities fraud class action filings over the past year and looks at the number of actions filed, the types of filings, the geographic locations of the filings, and the industries affected. In general, the report notes that fewer class action lawsuits were filed in 2012, fewer filings were made against companies in the Financial Industry, and no new filings were related to the credit crisis.

The number of securities class actions filed in 2012 dropped by 20%. 152 securities class action suits were filed in 2012, fewer than in either 2011 (188 suits) or in an average year from 1977–2011 (193 suits). The report noted that the decrease was “largely due” to the decrease in filings challenging mergers and acquisitions. 85% of the suits brought in 2012 contained Rule 10b-5 claims, the highest percentage in the last five years. The industry most targeted by securities class actions in 2012 was the “Consumer Non-Cyclical” industry, which includes tobacco, beverage, and personal and household products companies, while filings against Financial Industry companies have been decreasing. In fact, 2012 was the first year in which there were no new filings related to the credit crisis.

These securities class action lawsuits continue to be filed predominantly in the Second Circuit and the Ninth Circuit; however, Ninth Circuit filings fell from 55% of total filings in 2011 to 28% of total filings in 2012. 18% more actions were filed against companies listed on the NYSE or Amex, while the number of filings against companies listed on NASDAQ decreased 43%.

Cornerstone Research, “Securities Class Action Filings—2012 Year in Review,” is available at here.

©2014 Katten Muchin Rosenman LLP

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