The onslaught of subprime litigation that is now beginning includes a sizable securities class action component, Compliance Week reports. Although there is an entire spectrum of subprime-related litigation being filed now (“borrowers are suing lenders, investors are suing institutions that packaged and sold bad loans, shareholders are suing institutions that now are recognizing deep losses, and in some cases institutions are even suing one another”), shareholder suits make up a significant portion of these cases.
As discussed here, a recent study by Navigant Consulting showed that securities cases were the most common type of subprime-related cases in the second quarter of 2008, accounting for 41 percent of all filings. The securities cases include 11 new ARS cases filed in the second quarter of 2008, bringing the total to 22 ARS cases year to date.
Adam Savett
Adam Savett, director of RiskMetrics Group’s Securities Class Action Services, told Compliance Week that he’s counted 120 subprime-related securities class action cases thus far, and that most of these cases are at very early stages. Savett stated that fewer than 10 motions to dismiss have been filed in these 120 cases, with no more than five cases dismissed and at least a few motions denied.
