Value Of Securities Class-Action Settlements Up 39%

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Last year was a big one for class-action settlements in securities in terms of value, as litigation preceding the market decline came to a close.

Settlements in class-action securities cases rose 39% in 2009 to $3.83 billion and the number of settlements increased by six to 103, according to a report released yesterday by Stanford Law School and Cornerstone Research. 

There were two whopper cases which comprised 39% of last year’s settlements. UnitedHealth Group was ordered to pay $925.5 million over backdating stock options and dozens of banks and tech insurers agreed to pay $586 million to shareholders over an issue with IPOs.

The rise runs counter the number of securities class action that were filed last year, as the filings declined 24%.

According to Director of the Stanford Law School Securities Class Action Clearinghouse, Professor Joseph Grundfest, last year “Plaintiffs simply ran out of financial firms to sue, and the rising stock market made it harder for plaintiffs to assert claims.”

But, “because securities fraud litigation typically settles three to five years after the first complaint is filed, this year’s settlement activity reflects lawsuits brought roughly between 2004 and 2006. Given litigation trends over those years, the 2009 settlement data are within the zone of expected settlements, and aren’t much of a surprise,” said Grundfest.

Of course, as cases filed over the credit crisis and financial downturn reach settlements in the next few years, the value and number of settlements is predicted to continue to rise.

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