Securities Lawsuit Trends in 2011


. By Heidi Turner

A look back on trends in 2011 securities lawsuits shows that 2011 was not much different from previous years. The number of securities fraud lawsuits filed was reportedly in line with other years, while the payouts from securities fraud litigation was the third highest on record. The number of lawsuits linked to the credit crisis is now decreasing, although other securities lawsuits are holding steady or increasing.

According to an analysis of 2011 securities class-action trends, provided by NERA Economic Consulting (12/14/11), securities class-action filings in 2011 are in line with those filed in the past three years. The report's authors note, however, that while filings linked to the credit crisis are down, suits filed against Chinese companies listed in the US and suits filed involving M&A (mergers and acquisitions) objection suits are on the rise. Furthermore, cases alleging breach of fiduciary duty in mergers or acquisitions are still frequently filed.

The authors report that in 2011 the median settlement was $8.7 million, down from 2010 in which the median settlement was $11.0 million. Although the median settlement in 2011 securities litigation dropped from 2010, it was still the third-highest median settlement since 1995.

One of the more recent class-action lawsuits to be filed was against Jon Corzine, for his actions as CEO of MF Global, a financial firm that declared bankruptcy in October 2011. Farmers from Montana filed a class-action lawsuit against the former CEO, alleging that MF Global made bad investments and then took funds from segregated client accounts to cover its debt. According to ABC News (01/09/12), customers' money was improperly used by MF Global and then lost after MF Global declared bankruptcy.

Officials estimate approximately $1.2 billion of customer money is missing. Because MF Global is in bankruptcy protection, clients cannot sue for the missing money. They can, however, file a lawsuit—or an arbitration—against the company's executives. More lawsuits and/or arbitration will likely be filed while customers wait to learn whether they will recover their missing funds.


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