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Member, Beacon International Group, Ltd.
New securities lawsuits related to the credit crisis have dropped dramatically to pre-2007 levels, according to a Wednesday analysis by Advisen Ltd.
In the first quarter of 2010, plaintiffs filed only one new securities class action tied to the credit crisis, New York-based Advisen said. Overall, the number of securities lawsuits was down 39% compared with first quarter of 2009, according to the report sponsored by ACE Group of Cos. Ltd.
“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,” John Molka III, a senior industry analyst and editor at Advisen, said in a statement.
Still, financial firms were targeted most often, representing 31% of the 178 new cases in the first quarter, the report said. One-third of the first-quarter cases were securities fraud suits filed mostly by regulators, 31% were breach of fiduciary duty suits and 21% were securities class action filings.
One first-quarter 2010 suit was tied to Bernard Madoff’s Ponzi scheme, the report found. In the first quarter of 2009, 54 such suits were filed.
The report also noted that 13 credit crisis-related securities suits were dismissed during this year’s first quarter.
But given heightened enforcement activities by regulators, corporations and their directors and officers “would be unwise to let their guards down during the relative calm in the litigation storm,” according to the report.
Reports from Advisen and other groups have found that securities litigation declined significantly in 2009 compared with 2008.
Advisen counts each company accused of securities violations in a single complaint as a separate lawsuit.