Economic turmoil drives up securities lawsuit filings by 13%: Advisen

Economic turmoil drove a surge in securities lawsuit filings in 2009, according to a new report from Advisen Ltd. 
“The year saw securities lawsuit filings grow at a robust 13% rate, to 910 suits, eclipsing an already-elevated 2008 at 804 suits,” Advisen said in a press release announcing the report, Securities Suits Abound in a Harsh 2009.
The number of securities fraud suits filed by regulators grew sharply, reflecting a 22% increase over 2008.
“Litigators and regulators stayed busy in 2009,” noted John W. Molka III, the author of the report. “The first half of the year was dominated by credit crisis- and Madoff-related lawsuits. Those types of suits fell off sharply in the second half, but plaintiffs’ attorneys had a backlog of other cases waiting to be filed.”
The number of securities class action suits filed was essentially unchanged, with 234 suits filed in 2009 compared to 239 the prior year.
Although securities class action filings were essentially flat compared to 2008, they decreased as a percentage of all securities suit filed, coming in at about a quarter of the total.
That represents a continuation of a downward trend that began in 2005, when securities class action suits represented about half of all securities suits filed, Advisen says.
“Securities class action suits filed in federal courts account for many of the largest settlements, but every year they represent a smaller percentage of the total number of securities suits filed,” explained Dave Bradford, Advisen’s executive vice president.
“A growing threat to companies and their directors is escalating enforcement actions and lawsuits by regulators. Also, breach of fiduciary duty suits and other securities suits filed in state courts are on the rise. ”