image description

Fraud Settlement Values on the Upswing

by Yoko Goto
Eyes On Wall Street |

As the scale of corporate fraud in the last years has grown exponentially, it shouldn't be surprising that settlement amounts are increasing as well.

This is one of the key findings in Securities Class Action filings-2010 Mid-Year Assessment, issued by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse. This conclusion is echoed in Trends 2010 Mid-Year Study: Filings Decline as the Wave of Credit Crisis Cases Subsides, Median Settlements at Record High , another recent compilation of securities class action litigation settlements issued by NERA, the defense bar's go-to economic consulting group.

According to the Cornerstone report, federal securities class action activity continued to decrease in the first six months of 2010, to the lowest semiannual level since the first half of 2007. The decline in filings appears to be associated with the waning of our recent cycle of credit-crisis-related litigation. However, the NERA report shows that the median settlement in the first half of 2010 was $11.8 million, more than three times the 1996 median of $3.7 million-continuing a generally upward trend in median settlements.