Securities Class Action Filings Up

Securities class action filings in 2008 were at their highest level since 2004, dominated by a wave of litigation against financial services firms. According to an annual report by Stanford Law School and Cornerstone Research, a total of 210 federal securities class actions were filed in 2008, a 19 percent increase over the 176 class actions filed in 2007. Close to half of the 2008 litigation activity, or 103 class actions, involved firms in the financial services sector. The maximum dollar loss (MDL) attributable to all 2008 claims is $856 billion, a 27 percent increase over comparable 2007 data. Financial services firms represented 46 percent of MDL in 2008. A new Litigation Heat Map illustrates the intensity of litigation activity within each industry over time and shows that nearly one third of all large financial firms were named defendant in a securities class action filed in 2008. The financial firms named as defendants in 2008 represented more than half of the sector’s total market capitalization. However, the study predicted that litigation activity against the financial sector may decline next year because the supply of new defendants might be drying up.  

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