Securities Fraud Cases Increase: Class-Action Settlements On The Rise

Securities fraud lawsuits are growing – in part because of the involvement of the Securities and Exchange Commission (SEC). As reported March 10 by Reuters, 30% of class-action settlements in 2010 involved cases where the SEC had previously announced enforcement activity. That’s an increase of 20% over the past 14 years.

“SEC enforcement activity gives investor plaintiffs extra bargaining power,” said Laura Simmons, co-author of an annual study by Cornerstone Research on securities fraud lawsuits. “There is no reason to believe SEC enforcement activity will decline, and it should remain a ‘plus’ factor to increase future settlement amounts,” she said in the Reuters article.

The Cornerstone study showed that the largest approved settlement in 2010 was $624 million with mortgage lender Countrywide Financial Corp and its auditor, KPMG LLP. Countrywide is now owned by Bank of America Corp.