Class Action Filings Climb Again, With Push from Subprime Suits
Subprime litigation is fueling a rebound in securities class action lawsuits, a new report concludes.
In the first half of 2008, 110 class actions were filed and 63 of them were in the financial sector, according to a report by Cornerstone Research and Stanford Law School’s Securities Class Action Clearinghouse. Fifty-eight of the filings contain subprime-related allegations, according to a press release that summarizes the findings.
The number of filings in the financial services sector the first half of this year is higher than the total for all of last year, Legal Times reports. The class action rebound began in the second half of 2007 and followed a two-year period of reduced activity, the report says.
The report also found a big increase in market capitalization losses that spurred the lawsuits against the defendant companies. The median loss in the first half of 2008 was $243 million, more than twice the historical average.
Stanford law professor Joseph Grundfest told the Daily Journal (sub. req.) he believes most of the securities fraud lawsuits stemming from the mortgage crisis already have been filed. “Most of the big shoes to drop have already dropped,” he said. “Quite simply, the plaintiffs are running out of additional companies to sue.”