Federal securities class action activity fell in the first six months of 2012 compared with 2011, with 88 filings in the first six months of 2012, a drop of 6% from both the first half and second half of 2011, according to Securities Class Action Filings—2012 Mid-Year Assessment.
The report, a semiannual assessment by the Stanford Law School Securities Class Action Clearinghouse in cooperation with Cornerstone Research, notes that the slight decrease in total filings was largely due to the substantial decline in Chinese reverse merger (CRM) and merger and acquisition (M&A) filings.
There were five CRM-related filings and seven M&A-related filings in the past six months. “Compared with the first half of 2011, CRM filings were down 79% and M&A filings were down 67%,” the report states. And compared with the second half of 2011, “CRM filings were down 44% and M&A filings were down 68%.”
Despite the drop in CRM-related filings, filings against foreign issuers as a percentage of all filings were greater than every year since 1997, with the exception of 2011. “While the number of these nontraditional filings (i.e., CRM and M&A filings) has declined, traditional securities class-action filings have increased by 23% since the second half of 2011,” the report says.
Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse, said in releasing the report that the “decline in litigation activity related to Chinese reverse mergers comes as little surprise, as that sector of the market has already been badly hit by concerns over the integrity of Chinese private-company financial statements and these deals have been disappearing from the market.”