Q3 Securities Litigation Driven by New Charges

The third quarter saw a robust 169 new securities lawsuits filed, but the credit crisis is no longer leading the litigation charge, according to Advisen’s quarterly update on securities litigation.

The 169 suits filed in the third quarter represent an 11% increase over the second quarter’s total (see “Securities Cases on Downslope”), but still significantly trail the 249 suits filed in the first quarter, which was dominated by suits arising from the credit crisis, as well as suits against firms tied to the Bernard Madoff Ponzi scheme. Both securities class action and securities fraud cases grew solidly in Q3, representing approximately three-quarters of all securities lawsuit filings, the report said.

Securities class action suits (SCAS), no longer leading the pack, showed a bit of a comeback with 55 cases filed in Q3 2009, up from 38 cases the quarter before, but down from 59 cases a year earlier. Securities fraud filings led the way for the third straight quarter with 70 cases, up from 50 in the second quarter. Although they fell short of the 92 securities fraud suits in the first quarter, securities fraud cases represented 41% of all securities cases, an all-time high.

In third place was breach of fiduciary duty suits, at 27. The top three types of suits made up 90% of all suits for the third quarter. Other types of cases filed in Q3 2009 were derivative shareholder actions and other derivative cases (nine) and Ponzi scheme and other cases (eight).

Madoff-related and credit crisis-related cases dropped off substantially. Madoff-related new filings fell to six cases in Q3 2009, down from 17 cases in Q2 and 54 in the first quarter. Credit crisis-related cases came in at nine cases in Q3 2009, down from 24 cases in Q2 and 46 in Q1.

The report is available here.