According to a recent report authored by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, Securities Class Action Filings—2012 Year in Review (pdf), 19 percent fewer securities fraud class actions were filed in federal court in 2012 than in 2011. The 152 new class actions filed in 2012 is the second-lowest such number in the last 16 years.
The report attributes the decline to sharp decreases in filings over M&A activity and Chinese reverse mergers. Financial firms and businesses in the S&P 500 also faced fewer securities class actions. The report notes that securities class actions relating to mergers “are now being pursued almost exclusively in state courts.” There is no doubt that defendants continue to view M&A lawsuits as a serious problem, regardless of where they are venued. (For more on the M&A issue, please see this report by the U.S. Chamber of Commerce, authored by our colleague Andy Pincus.)
The report also provided information about the 3,001 whistleblower tips that the SEC received under the Dodd-Frank whistleblower program between October 2011 and September 2012. The chart below (reproduced from the report) breaks down the types of allegations made in these complaints, which might provide a window into future SEC enforcement actions or securities class action filings.
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