U.S. securities litigation returns to pre-financial meltdown levels

After dominating U.S. securities litigation for three years, new securities lawsuit filings related to the global credit crisis all but disappeared in 2010 Q1, according to Advisen Ltd’s latest quarterly report on securities litigation, sponsored by ACE.
“The securities litigation landscape now looks more like it did prior to 2007, before the meltdown of the subprime mortgage market and the credit crisis sparked hundreds of lawsuits, largely against financial institutions,” said John Molka III, the author of the report Securities Suits Ease Back to Normal Following a Frantic Two Years.
“The number of filings was down 39% compared to the first quarter of 2009, and only one of the new filings was related to the credit crisis.”
Out of the 178 first-quarter filings, one third were “securities fraud” cases filed principally by regulators and law enforcement agencies, Advisen said.
“Breach of fiduciary duty suits, largely filed in state courts, accounted for 31% of the total, and securities class action suits comprised 21% of new securities suit filings,” Advisen said.
“The number of securities class action suits filed as a percentage of total securities suits filed has been steadily falling since 2004.”
Overall, new securities lawsuit filings were down sharply, Advisen said. “Additionally, several high profile credit crisis lawsuits were dismissed during the quarter by judges unwilling to hold corporate directors and officers responsible for the effects of a worldwide financial crisis.”