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SAN FRANCISCO — More companies settled securities class actions for less money on average in 2007 than the prior year, a new research study shows. And it may get even better in the next few years. The number of cases settled rose 21%, up from 92 in 2006 to 111 in 2007, according to Cornerstone Research of San Francisco. And although the median value of settlements rose to $9 million, the highest to date, the total value of settled cases in 2007 dove 60%, to $7 billion, down from the all-time high of $17.2 billion in 2006. This can be attributed, in part, to the 2006 Enron case settlement of $7.2 billion, the largest in history, according to the Cornerstone figures. The 2007 settlement by Tyco International for $3.2 billion ­ the third largest behind Enron and WorldCom ­ accounted for 45% of the total value of 2007 settlements, dramatically affected last year’s numbers. The numbers going forward may also be bright for corporations given the lack of cases in the system. “It seems clear that the aggregate dollar value of settlements over the next two or three years is likely to decline significantly because the inventory of large cases in the pipeline just isn’t there,” said Joseph Grundfest, professor at Stanford University Law School and director of the Securities Class Action Clearinghouse, which is sponsored in cooperation with Cornerstone Research. “The interesting open question is whether the sub prime crisis will cause an up tick in securities fraud settlement activity that might, given settlement cycles in the litigation industry, only become apparent three to five years from now,” he said. The report also noted the faded dominance of two plaintiff class action firms whose leading partners, William Lerach and Melvin Weiss, have pleaded guilty in a criminal case involving kickbacks paid to plaintiffs. Their firms are Lerach Coughlin Stoia Geller Rudman & Robbins, now Coughlin Stoia Geller Rudman and Robbins, and Milberg Weiss Bershad & Schulman, now known as Milberg. Before 2007, both firms served as lead or co-lead plaintiff counsel in more than half the securities class action settlements. That dropped to a 46% share in 2007, the report states. There were fewer of the mega-settlements, over $100 million. Those declined from 14 in 2006 to nine in 2007. But the middle range grew. More cases were settled in the $10 million to $20 million range in 2007 than 2006, accounting for one-quarter of all the settlements last year. It had been just 10% in 2006. And fewer settlements were reported in the low end of under $5 million. That brought the median amount up to the $9 million figure for 2007. Settlement of derivative actions seems to be on the rise. More than 55% of the cases settled in 2007 were accompanied by the filing of a derivative action. That’s up from just 45% in 2006 and 35% in 2005.

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