(January 24, 2013) — Securities fraud class actions are on the decline, according to a study by Stanford Law School and Cornerstone Research.
The study showed that the number of new federal securities fraud lawsuits seeking class-action status fell to a 6-year low last year. In 2012, there was a total of 152 such lawsuits filed, which was down 19% from 188 the previous year. The decline was largely due to fewer lawsuits challenging mergers, the researchers said.
The study also confirmed that large companies also were sued less in 2012 than in prior years. Seventeen companies in the Standard & Poor’s 500 index were named as defendants in 2012, versus an average of 31 over the prior decade.
“Data in the recently published SEC report on the Dodd-Frank whistleblower program provide potentially valuable insights for possible future securities litigation trends,” the report forecasted. “From October 1, 2011, through September 30, 2012, the SEC received 3,001 whistleblower tips. The most common tip categories were Corporate Disclosure and Financials, Offering Fraud, and Market Manipulation. Together, these categories accounted for nearly 49 percent of all tips received.”
The survey showcasing a drop in fraud class actions comes as Deloitte & Touche has won dismissal of a lawsuit filed by an Iowa pension fund over the auditing of WG Trading Co. US prosecutors said the company was used as a Ponzi scheme by two of its former managers. The pension, which reportedly invested nearly $500 million in entities controlled and used by both men, sought about $39 million of an investment and fees made in WG Trading, Bloomberg initially reported.
In a complaint filed last year, the $23.9 billion Iowa Public Employees’ Retirement System said that it suffered millions of dollars in losses as a result of the scheme.
The case is Iowa Public Employees’ Retirement System v. Deloitte & Touche LLP, 12-cv-2136, U.S. District Court, Southern District of New York (Manhattan).
Read about the study by Stanford Law School and Cornerstone Research here.