The Stanford report also shows that about half of the 110 filings between Jan 1 and June 30, 2008 were related to the U.S. subprime mortgage crisis and global credit crunch; moreover, the increased filings have caused defendant firms’ market capitalization losses to skyrocket.
Do these securities class action filings threaten average shareholders’ assets? According to a recent report issued by the Institute for Legal Reform (IRL), compelling evidence shows that such filings are putting U.S. businesses in peril, and threaten the economic health of individual investors. Lawsuit-related monetary losses in 2007 doubled since 2006, and settlement costs may even exceed litigation costs as more companies hope to salvage some of their stock price and reputation. The ILR report urges Congress to investigate fraud and abuses in the securities plaintiffs’ bar, and suggests legislative changes.