The value and number of federal securities class action settlements declined in 2008, according to Securities Class Action Settlements: 2008 Review and Analysis, an annual report by Cornerstone Research.
The average settlement value fell by slightly more than 50 percent from $62.7 million in 2007 to $31.2 million in 2008.
This decline reflects a sharp drop in multi-billion-dollar “mega-settlements,” which have been far more common in recent years.
The decline in the total number of settlements was a more modest 10%, from 110 in 2007 to 99 in 2008.
This decline is unlikely to signal a continuing trend. The ongoing financial crisis has caused an increase in litigation activity that could have an impact on settlement volume within the next year or two as cases associated with the subprime collapse and liquidity crisis begin to be resolved.
In a statement issued yesterday, Joseph Grundfest who directs Stanford Law School Securities Class Action Clearinghouse in conjunction with Cornerstone, said the decline was expected given the “recent vigorous settlement activity.” He predicted that settlement figures would begin to rise as cases stemming from the financial crisis wind their way through the judicial system.