Class-Action Lawsuits, Fading into Oblivion? Nah…

By October 11, 2007Briefly Legal

With the heavy coverage about the Stoneridge v. Atlanta Scientific, we overlooked the reporting of positive news in USA TODAY last week. Seems only fair to highlight it: “Fewer lawsuits charge securities fraud.”

Once-thriving securities-fraud lawsuits, hailed by shareholders and bashed by businesses, are facing an onslaught of legal challenges that could cripple the controversial class actions.
The number of federal securities-fraud lawsuits is steadily falling. Businesses are stepping up their assault on what they call frivolous litigation. Government investigations are chilling plaintiff’s attorneys. And Tuesday, the U.S. Supreme Court will hear arguments in a hotly debated case that may greatly narrow the scope of such lawsuits.

The legal climate has gotten so dicey that some securities-fraud attorneys are seeking new revenue and pursuing litigation in antitrust, consumer products, subprime mortgages, employee pension plans and other areas, says James Cox, a law professor and securities-fraud expert at Duke University.

Alas, not unalloyed positive news.

Still, from a high of 240 securities lawsuits filed in 1998, the number dropped to 116 last year — the lowest figure in a decade. That’s the result of lots of hard work from many, many people in the legal reform movement working to bring fairness and economic rationality to the legal system.

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