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M&A Drove 2011 Securities Actions As Crisis Suits Died Down

Posted: April 11, 2012
By: Ian Thoms
Source: Law360
Practice Areas: Securities Litigation

With fewer opportunities to bring new cases over the financial crisis, many shareholder plaintiffs have redirected their aim to corporate transactions, bringing a flood of class actions over mergers and acquisitions in 2011, according to a report released Wednesday by PricewaterhouseCoopers LLP.

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"You can pretty much expect that there's going to be shareholder litigation on at least half of the mergers coming down the pike," said Sherrie Raiken Savett, a partner with plaintiffs firm Berger & Montague PC. "They're very easy to bring."

Largely because of the M&A cases and an increase in suits filed against foreign issuers - 61 cases - overall securities class action activity was up 10 percent in 2011. A total of 191 federal securities cases were filed in 2011, up from 174 in 2010 and 157 in 2009.

"But without the M&A cases, classic securities class actions were at historic lows," Savett said.

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While federal cases against financial firms continued to dwindle, Savett said plaintiffs might bring a last slate of suits over the financial crisis in state court, especially in New York, where longer statutes of limitation allow for later filings.

"You might see a flurry of fraud cases by the end of this year," Savett said. "Then, I think, the new financial crisis cases will be over."

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