Securities Class Action Filings Fall Dramatically

WIth securities class actions being dismissed at an alerming rate and charges being filed against high-profile securities class action attorneys, it’s not suprising that securities class action filings fell 42% in the first half of 2007. In fact, this is the fourth consecutive semi-annual drop in filings of such cases, according to the Stanford Law School Class Action Clearinghouse and Cornerstone Research.

The study group has propounded a variety of possible theories for the precipitous drop in securities class actions. One absolutely preposterous theory, unsupported by data, is that securities fraud has dropped because of prior settlements and fines. A spokesman from the Stanford group states: “Economic theory suggests these factors should lead to a decline in the incidence of fraud–exactly what we have seen occur since the middle of 2005.”

Another of the group’s questionable explanations for the decrease in securities class action filings is a “strong stock market” hypothesis. Under that hypothesis, decreased levels of class action filings correlate to a strong stock market with low volatility. Yet, historical data also does not support this hypothesis.

Meanwhile, no mention was made in the group’s report of the chilling effect of the wholesale dismissal of large numbers of class action cases by Wall Street friendly judges, for example, the case filed by Enron shareholders against Merrill Lynch and other firms. One Stanford Group spokesmen mentioned, but dismissed, any possible effect of indictments, guilty pleas and threats currently persued against leading class action attorneys by politically appointed federal prosecutors.

Judging from its irrational thinking, this study must have either been conducted in Stanford’s “Ivory Tower” or, more likely, the study group is funded by Wall Street, insurance companies and/or other anti-lawsuit factions.

Although securities class action claims may soon be extinct Shepherd Smith and Edwards specializes in representing clients one at a time. We have served thousands of individual and institutional victims of misconduct by members of the securities industry. Hiring an experienced law firm can greatly increase your chance of recovery. To learn whether your or your firm’s investments were mishandled contact us to arrange a free consultation with one of our attorneys.

Related Web Resources:

The Stanford Group’s latest mid-year report of securities class action claims.