Mammoth shareholder filings against such scandal-hit corporations as WorldCom, Raytheon and Bristol-Myers Squibb contributed to a 33 percent rise in the average settlement value of class-action litigation to $27.1 million, compared to the prior year, according to a study conducted by global consultancy NERA Economic Consulting. Of the 119 settlements made last year, nine were valued at $100 million or more, while16 settlements exceeded $50 million. NERA said that one of the determining factors behind the settlements was the magnitude of investor losses -- calculated by estimating how much a stock changed compared to the S&P 500. In 2004, investor class losses in the typical suit were $1.7 billion, compared to an average of $140 million in 1996. According to NERA, federal filings in 2004 remained roughly the same at 238, compared with 234 in 2003. Three years ago, class-action suits hit a peak of 505 filings. NERA data projected that if class-action suits continue to be filed at the same pace as in 2004, a publicly traded company faces a 10 percent probability that it will be named in at least one suit over the next five years.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access