Securities Class Action Recoveries Blog

Securities Class Action Landscape Dramatically Changing

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Kevin LaCroix of The D&O Diary recently interviewed Stanford Law Professor Joseph Grundfest about the current trends in the securities class action landscape. Professor Grundfest oversees the website of the Stanford Law School Securities Class Action Clearinghouse, who in conjunction with Cornerstone Research, published their annual report on securities class action filings this month.

Professor Grundfest identified a number of trends that he found to be significant. He identified the “dramatic increase in merger related federal class securities fraud litigation” as the most important trend of 2010. Financial Recovery Technologies (FRT) previously commented on this trend and its potential causes. As “traditional” fraud declines, the business of filing for securities class actions has to adjust. In this case the demand for new cases causes a shift towards new causes of class action suits, such as M&A activity.

The Dodd Frank Act’s provisions that compensate whistleblowers via “bounties” for reporting SEC violations were identified by Professor Grundfest as a potential wildcard that could have industry altering ramifications. Per Professor Grundfest, “if the presence of the bounty causes a material increase in SEC enforcement actions, it is reasonable to expect an increase in parallel private actions.” He went on to explain how in the current environment it is typically only a short matter of time for a private complaint to follow a SEC enforcement action.

In 2011, Professor Grundfest expects further changes in the securities class action industry. He expects to see a further uptick in cases that are related to mergers and fewer cases targeting foreign trading activity as the Morrison decision continues to be interpreted by lower courts. Unexpected changes could also come from the three securities cases that are currently pending before the Supreme Court.

With all of the recent changes in the securities class action landscape it is more vital than ever for institutional investors to work with a service provider who monitors all of the latest changes in the industry.

To read the full interview with Professor Grundfest: http://www.dandodiary.com/2011/01/articles/securities-litigation/interview-with-stanford-law-professor-joseph-grundfest-about-the-state-of-securities-class-action-litigation/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DandODiary+%28The+D+%26+O+Diary%29

Financial Recovery Technologies
Financial Recovery Technologies is a technology-based services company which exclusively focuses on enabling investment management firms to maximize the recovery of client funds while simultaneously lowering their operating costs. Through our proprietary technology platform and processes, we deliver the most comprehensive range of securities class action filing services available.  Our firm excels by providing best-in-class eligibility analysis, disbursement auditing and client reporting, and we deliver the highest level of accuracy, accountability and transparency available.