July 27, 2010 / 3:46 PM / 9 years ago

US securities fraud suits drop, alleged losses up

* Pace of lawsuits down 9 percent, median losses up 20 pct

* Credit crisis, Ponzi cases wane

* Average settlement soars, helped by Enron

NEW YORK, July 27 (Reuters) - Investors are alleging more losses than ever before when they sue companies for securities fraud, though the pace of such lawsuits seeking class-action lawsuits has fallen to the lowest level since 2007.

There were 101 securities class-action filings from January to June, according to a NERA Economic Consulting study released on Tuesday.

If that pace continues for the full year, there would be 202 filings for all of 2010, down 9 percent from 221 in 2009 and down 19 percent from 248 the previous year.

NERA attributed the decline to a drop in new litigation tied to the recent credit crisis and Ponzi schemes.

Offsetting the decline were several filings against BP Plc (BP.L) and other companies associated with the Gulf of Mexico oil spill, and more cases alleging breaches of fiduciary duty.

The median investor loss, where half are larger and half are smaller, nonetheless rose 20 percent from 2009 to $436 million, and topped the old record $398 million set in 2006.

While the average settlement was $209 million, more than double the previous record, the sum was skewed by February’s $7.24 billion final settlement for Enron Corp’s 2001 collapse.

The median settlement is nonetheless on track for all of 2010 to reach eight figures for the first time, rising 31 percent to $11.8 million from last year’s $9 million.

American International Group Inc’s (AIG.N) $725 million accord this month with a group of Ohio pension funds pushed total settlements for the insurer to $1.01 billion, making it the 10th-largest among securities class-actions, NERA said.

NERA said the first half saw just 17 credit crisis-related lawsuits, putting the year on track to have 34. That would be down from 57 last year and 103 in 2008.

There were also just two new lawsuits over Ponzi schemes, which gained notoriety after the now-imprisoned swindler Bernard Madoff was arrested in December 2008. Thirty-eight Ponzi lawsuits had been filed in 2009.

Also possibly due for a decline are lawsuits against non-U.S. companies. There were 16 from January to June, marking the fastest pace since 2004, and the highest percentage of total lawsuits in at least 15 years.

NERA said the pace of such lawsuits could fall after a June ruling by the U.S. Supreme Court, in a case involving National Australia Bank Ltd (NAB.AX), limited claims that could be made against non-U.S. companies not listed on U.S. stock exchanges.

On the other hand, NERA said there could be an increase in filings after recently adopted regulatory reforms directed the U.S. Comptroller General to study whether to allow private rights of action for aiding and abetting in securities fraud. (Reporting by Jonathan Stempel in New York, editing by Matthew Lewis)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below