Securities fraud class action settlements up in 2009

According to a new study jointly published by Cornerstone Research and Stanford University's School of Law, securities fraud class action settlements rose in dollar value last year.  There were 103 settlements totaling $3.83 billion in 2009, up from 97 settlements worth $2.75 billion in 2008.

But two settlements alone accounted for 39 percent of last year's total: UnitedHealthGroup's $925.5 million paid to settle options backdating charges, and a $586 million settlement that major investment banks and dozens of other defendants paid to end litigation over alleged fraudulent IPO practices.

The median settlement was exactly the same as the prior year -- $8 million.

Institutional investors were the lead plaintiffs in 65% of the settled cases.  Fostering institutional investor involvement in class actions was one goal of the Private Securities Litigation Reform Act of 1995.

Experts attribute the increase to a combination of securities fraud cases stemming from the financial crisis, as well as the settlement of the two mega-cases regarding UnitedHealth and IPOs.

Related posts:

1. NERA study on securities fraud class actions cites contradicting trends
2. Settlement of Countrywide securities fraud class action is trimmed by over $23 million as investors opt out
3. BankAtlantic loses securities fraud class action, asks court to overturn verdict