…The data indicate that cases involving bankrupt companies are in fact successful for plaintiffs more than are cases against solvent companies. Among cases filed since 2000, only 29% of cases involving bankrupt companies were dismissed or voluntarily dropped, compared to 46% of cases against solvent companies. The low rate of dismissal for these cases suggests that they may be more meritorious than cases against solvent companies. This inference is supported by the fact that cases involving bankrupt companies more often have parallel SEC enforcement actions in which severe penalties were imposed than do cases against solvent companies—specifically, 25% compared to 15%.
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