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Securities Class Action Settlements
2009 Review and Analysis

Value of 2009 Securities Class Action Settlements
Increased to $3.8 Billion,
According to New Report by Cornerstone Research

Average Amount for 2009 Settlements Rose to $37 Million

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See also:
2003 Securities Class Action Settlements
2004 Securities Class Action Case Filings
2004 Securities Class Action Settlements
2005 Securities Class Action Case Filings
2005 Securities Class Action Settlements
2006 Securities Class Action Case Filings
2006 Mid-Year Assessment:
   Securities Class Action Case Filings

2006 Securities Class Action Settlements Study
2007 Securities Class Action Case Filings
Securities Class Action Settlements:
   2007 Review and Analysis

2007 Mid-Year Assessment:
   Securities Class Action Case Filings

2008 Mid-Year Assessment:
   Securities Class Action Case Filings

2008 Securities Class Action Case Filings Report
2009 Mid-Year Assessment:
   Securities Class Action Case Filings

2009 Securities Class Action Case Filings Report
marginAccording to Securities Class Action Settlements: 2009 Review and Analysis, an annual report by Cornerstone Research, the value and number of securities class action settlements increased in 2009 from 2008. Securities class action settlements totaled $3.8 billion in 2009, a jump of more than 35 percent from 2008. The study identifies a total of 103 settlements approved in 2009, up slightly over the 97 settlements in 2008. The average settlement value increased from $28 million for settlements in 2008 to $37 million for settlements in 2009. The largest industry concentration among 2009 settled cases was in the financial sector, but these settlements primarily were for case filings with class periods ending prior to 2008. Securities case filings related to the credit crisis in 2008, for the most part, are yet to be resolved.
Simmons Photo
Laura E. Simmons, Ph.D.
Cornerstone Research

marginProfessor Joseph Grundfest, Director of the Stanford Law School Securities Class Action Clearinghouse in cooperation with Cornerstone Research, made the following observations about the settlements report:

Bullet   “The classic litigation risk factors continue to run true to form. If a lawsuit is prosecuted by a large public pension fund, involves a parallel SEC proceeding, and alleges accounting violations, then defendants can be expected to pay higher amounts.”

Grundfest Photo
Joseph A. Grundfest, Esq.
Professor, Law and Business
Stanford Law School

Bullet   “Because securities fraud litigation typically settles three to five years after the first complaint is filed, this year’s settlement activity reflects lawsuits brought roughly between 2004 and 2006. Given litigation trends over those years, the 2009 settlement data are within the zone of expected settlements, and aren’t much of a surprise.”

marginProfessor Laura Simmons of the College of William & Mary Mason School of Business and Cornerstone Research Senior Advisor, made the following observations:

Bullet   “As we predicted last year, the decline in settlements that occurred in 2008 has proven to be temporary. Looking ahead, we anticipate that as cases brought in conjunction with the 2008 stock market decline and surrounding credit-crisis issues are resolved, settlements are likely to continue to increase both in number and value.”

Bullet   “While financial statement restatements reportedly have been declining in recent years, this trend has yet to be borne out in securities case settlements, as restatements were associated with 45 percent of cases settled in 2009 (the highest proportion in more than a decade).”

Key Findings

Bullet   The median settlement in 2009 was $8 million, unchanged from 2008. While this is lower than the inflation-adjusted median of $9.3 million in 2007, it is higher than the median for all cases settled from 1996 through 2008.

Bullet   Estimated “plaintiff-style” damages for all cases settled in 2009 averaged $2.7 billion, a 35 percent increase, adjusted for inflation, over the average for 2008 settlements.

Bullet   Inflation-adjusted median Disclosure Dollar Loss — the dollar value decrease in the defendant firm’s market capitalization at the end of the class period — for cases settled in 2009 was approximately $140 million, an increase of nearly 15 percent over the inflation-adjusted median for 2008.

Bullet   Institutional investors continued to participate actively in post–Reform Act securities class actions and served as lead plaintiffs in nearly 65 percent of 2009 settlements. Cases involving public pensions as lead plaintiffs were associated with significantly higher settlements.

Bullet   Approximately 45 percent of 2009 settlements involved companion derivative actions, slightly higher than the 40 percent in 2008. Derivative actions tended to be associated with larger class actions and significantly higher settlement amounts.

Bullet   Alleged violations of Generally Accepted Accounting Principles (GAAP) were included in more than 65 percent of settled cases in 2009. C ases with GAAP allegations had larger settlement amounts and a higher percentage of estimated damages compared with cases not involving accounting allegations.

Bullet   The Ninth Circuit (California/Alaska/Arizona/Hawaii/Idaho/Montana/Nevada/Oregon/ Washington) had the highest number of settled cases in 2009 with 28 settlements, followed by the Second Circuit (New York/Connecticut/Vermont) with 22 cases settled.

marginA full copy of this Cornerstone Research Report is available at Securities Class Action Settlements: 2009 Review and Analysis. Additionally, Dr. Simmons and Professor Grundfest are available for interviews.


Cornerstone Research provides financial and economic analysis in litigation and regulatory proceedings, with a focus on securities, antitrust, intellectual property, financial institutions, energy, and accounting. Cornerstone Research also cosponsors Stanford Law School's Securities Class Action Clearinghouse, the leading source of data and analysis on the financial and economic characteristics of securities class action litigation.
Laura E. Simmons, Ph.D.

Cornerstone Research
1875 K Street, N.W., Suite 600
Washington, DC 20006

202.912.8998 — 757.546.5117
           Fax 202.912.8999

Email: Laura E. Simmons, Ph.D.


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Joseph A. Grundfest, Esq. William A. Franke
Professor of Law and Economics

Stanford Law School
Crown Quadrangle
559 Nathan Abbott Way
Stanford, CA 94305-8610


Email: Joseph A. Grundfest,


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Thomas A. Faulhaber, Editor

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Revised: March 24, 2010 TAF

© Copyright 2010 Laura E. Simmons, Ph.D. and Professor Joseph A. Grundfest, Esq. / Cornerstone Research, All Rights Reserved