“When you’re a securities litigator, whether you’re on the defense side or the plaintiffs side, bad markets are good for business. That’s just a fact of the matter,” said attorney Brett Sherman, who represents nearly a dozen former Bear Stearns employees who plan to sue the company over losses to their now-deflated stock options.
The current financial crisis has helped accelerate the pace of securities class actions filed this year. At the current pace, Stanford Law School’s Securities Class Action Clearinghouse indicates that approximately 220 such cases will be filed this year, according to McClatchy Washington Bureau. The continued failures in the banking sector will only increase these numbers: “New waves of litigation could still emerge,” said Jeff Nielsen, who heads Navigant’s financial services disputes and investigations section.
Perhaps more significantly, however, is the fact that the average loss for defendant companies in the securities class actions filed in the first half of 2008 was $243 million, more than twice the historic average.
“Not since the period of heightened filing activity in 2000 to 2002 have we seen market capitalization losses of this size among defendant firms,” said John Gould, vice president of Cornerstone Research, a commercial litigation consulting firm.
Read the McClatchy Washington Bureau article
