Subprime-related Litigations Spur Spike in Shareholder Suits

U.S. lawyers are on track to bring about 58% more shareholder class action cases this year, Reuters reports.

A study from NERA Economic Consulting indicated there will be 207 shareholder lawsuits filed in 2007 requesting class action status, compared to 131 for 2006. The spike can be attributed to lawsuits against investment banks, lender, and other financial institutions following the subprime mortgage market collapse (See State Street Faces Two More Lawsuits Over Bond Fund Losses), according to the report.

According to NERA, as of December 15, there were 198 new shareholder cases requesting class action certification, including 38 involving subprime mortgage issues, Reuters said. The study’s authors said that more litigation is likely as the crisis in the credit markets continue and the market for subprime mortgages continues to suffer.

After a lull in filings last year, new class action cases are back up to 2005 levels.