Cornerstone's 2007 Securities Settlement Analysis

Kevin LaCroix's The D & O Diary Blog reports that Cornerstone Research released its review and analysis of 2007 securities class action settlements:

Cornerstone’s press release emphasizes that the aggregate dollar value of all settlements was down 60% compared to 2006, but the full report emphasizes that, when the four largest settlements are removed from the analysis, the aggregate value of all settlements in 2007 exceeded all prior years except the unprecedented year of 2006.

Of interest here is the question of Professor Grundfest concerning the uptick of activity now underway as a result of the "subprime crisis" and whether that will mean more and larger settlements 3-5 years from now. I certainly agree that there is a crisis for investors, and agree that there will be a flury of settlements from these suits which began to be filed last summer. As I lectured at the PLI Institute in September, the demise of securities fraud class actions was nothing more than a temporary lull waiting for the next new financial bubble to crash. All you need to do is follow the money. In the 80's it went into the Savings and Loans, in the 90's into High Tech and in the first decade of the 2000s it flowed into mortgages.

I predict that when this mess is sorted out, we will see that the unsuspecting small investor has been left holding the bag by mutual fund managers chasing yields.

For more on Kevin's analysis of the Cornerstone report, go to his blog.  Links to the report are also there.