Last week, PWC issued its 2009 Securities Litigation Study, the firm's annual review of securities class action litigation. The report finds that the number of securities class action filings in 2009 declined markedly from that of 2008 (155 in 2009 versus 210 in 2008).
The financial crisis dominated events for yet another year, although to a lesser degree than in 2008. The number of private securities litigation matters fell, as did the number of such matters filed against financial services companies—perhaps signaling a change of focus by the plaintiffs’ bar to other industries as the new decade begins.
Other key findings were that institutional investors played a key role as lead plaintiffs during 2009, the number of settlements decreased from 2008, and regulators and law enforcement agencies stepped up their enforcement and prosecution efforts during the period.
Institutional investors remained active as lead plaintiffs during 2009, although to a lesser extent than in previous years. The percentage of total 2009 filings naming an institutional investor as lead plaintiff fell to 48 percent from a high of 60 percent in 2005, and an average of 52 percent since 2002.
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The number of settlements was two lower in 2009 than in 2008, though the total remained slightly higher than the average annual number of settlements recorded since the passage of the Private Securities Litigation Reform Act of 1995 (PSLRA). A total of 93 settlements were made in 2009 compared to 95 in 2008. The total value of settlements agreed in 2009 decreased when compared to 2008. Total settlement value in 2009 was $3.1 billion compared to $3.9 billion in 2008—a decrease of 21 percent. The average settlement value in 2009 was 20 percent less than in 2008, though it remained 10 percent above the average settlement value over the last ten years.
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By the end of 2009, the DOJ reported that it had some 189 major corporate fraud investigations in process, 18 of which have losses over $1 billion.4 The SEC claimed to have opened 54 more investigations than in the previous year.5 The SEC continued to reach substantial settlements in matters related to auction rate securities (ARS) with companies including Deutsche Bank, Bank of America, and RBC Capital Markets, in addition to reaching settlements in other financial-crisis-related cases that included Evergreen Investment Management Company and UBS AG.
The full text of PWC's 2009 Securities Litigation Study is available at: http://10b5.pwc.com/PDF/NY-10-0559%20SEC%20LIT%20STUDY_V7%20PRINT.PDF