The number of companies sued in securities class action litigation rose 43% between 2006 and 2007, to 166 from 116, according to a report by the Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research. Litigation activity for 2007 was 14% below the 10-year historical average (1997–2006) of 194 companies sued per year, but the report noted that activity jumped in the second half of 2007 as the subprime mortgage crisis unfolded and stock market price volatility increased.
One hundred companies were sued in the second half of the year, a litigation rate that reversed a trend of eight consecutive quarters with below average litigation activity. Of the filings in the second half of the year, 23 were related to subprime issues.
This year’s report for the first time tracked the outcome of cases filed in previous years. Of cases filed between 1996 and 2001, 35% were dismissed and 64% were settled. The median time from filing to settlement was 33 months. The report is available at http://securities.stanford.edu/clearinghouse_research/2007_YIR/20080103-01.pdf.