Securities class action filings drop sharply

The decline is largely due to a drop in M&A and Chinese reverse merger filings

Corporate America’s reputation took a hit during the financial crisis, but, in a potentially encouraging sign for business, the number of federal securities fraud lawsuits seeking class-action status fell to its lowest number in six years in 2012, according to a new study by Stanford Law School and Cornerstone Research.

Last year saw 152 such suits, down from 188 in 2011. Filings against large companies hit their lowest point in 13 years in 2011 and 2012, as only one of every 29 Standard & Poor’s 500 companies faced a new securities class action filing last year. Filings targeting financial sector companies also decreased, to 15 filings in 2012 compared with 43 in 2010.

Alanna Byrne

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