With 210 federal securities class-action lawsuits filed in 2008, the level of litigation last year was at its highest level since 2004, according to a new study.

The report, by Cornerstone Consulting and the Stanford University Law School Securities Class-Action Clearinghouse, found that almost of the securities class action complaints involved firms in the financial services sector. The maximum dollar losses attributable to 2008 claims jumped to $856 billion, a 27 percent increase over comparable claims in 2007.

However, the percentage of complaints alleging specific accounting irregularities decreased to 44 percent in 2008 from 48 percent in 2006. There was a shift in emphasis in GAAP allegations from those related to traditional income statement line items to allegations related to balance sheet components. The share of filings alleging GAAP violations that specified revenue recognition decreased from over 35 percent in 2002 through 2006 to 17 percent in 2007 and 26 percent in 2008.

Filings alleging understatement of expenses decreased from 46 percent in 2006 to 19 percent in 2007 and 14 percent in 2008. Meanwhile, the percentage of GAAP-related filings alleging the overstatement of assets other than accounts receivable and problems with estimates both increased to new highs in 2007 and 2008. In contrast, the percentage of GAAP-related filings alleging understatement of liabilities increased from 2006 to 2007 and then decreased in 2008. 

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