Securities class action settlements rebounded slightly in 2009 after experiencing a significant decline in 2008.
That is the key finding of a report released Wednesday by Cornerstone Research, an economic and financial consulting firm.
The report tracked 103 such court-approved settlements in 2009, up slightly from 97 in 2008. The total value of securities class action settlements grew by more than 35 percent, from $2.75 billion in 2008 to $3.8 billion in 2009. The average value of securities class action settlements grew in 2009 to $37 million from $28 million during the previous year.
The report does not attribute the growth in settlements to the credit crisis of 2008. Most of the litigation tied to the stock market decline and credit crisis has yet to be resolved, and likely won't produce settlements until later this year, 2011 or beyond, said Laura Simmons, a professor at the College of William & Mary Mason School of Business and senior research adviser at Cornerstone Research.
Rather, the settlement numbers were higher in 2009 due to a relative dearth of comparable settlements in 2008 -- a fact Simmons attributes to a wave of settlement activity between 2005 and 2007 that left the cupboard dry of cases in 2008. Unlike 2006 and 2007, there were no settlements of $1 billion or more in either 2008 or 2009, according to the report.
"As we predicted last year, the decline in settlements that occurred in 2008 has proven to be temporary," Simmons said. "Looking ahead, we anticipate that as cases brought in conjunction with the 2008 stock market decline and surrounding credit crisis issues are resolved, settlements are likely to continue to increase both in number and value."
Of the 103 settlements during 2009, 19 involved the finance sector, 16 involved the pharmaceutical industry and 15 involved the high-tech sector, according to the report.
Coughlin Stoia Geller Rudman & Robbins represented the plaintiffs in 27 percent of the cases that settled in 2009, with Barroway Topaz Kessler Meltzer & Check representing 12 percent and Bernstein Litowitz Berger & Grossmann representing 10 percent.
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