According to Securities Class Action Settlements: 2008 Review and Analysis , the annual settlement value fell by slightly more than 50%, from $62.7 million in 2007 to $31.2 million in 2008. The number of settlements decreased to 99 in 2008 from 110 in 2007.
In a press release, Cornerstone said the sharp drop can be attributed to the decline in multi-billion dollar settlements. No “mega settlement” of more than $1 billion was made in 2008.
Institutional investors served as lead plaintiffs in more than 60% of cases in 2008. Cases involving public pensions as lead plaintiffs are associated with significantly higher settlements, according to the press release.
The median amount of cases settled in 2008 was $8 million, compared with $9 million in 2007, which was an all-time high for all cases settled between 1996 through 2007, according to Cornerstone.
Cornerstone analysts said the decline is unlikely to be a trend in upcoming years. “Settlement figures may well bounce back over the next few years as cases associated with potentially large damages related to the current financial collapse work their way through the judicial system,” said Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse and co-author of the report, in the press release.
Cornerstone also found the average length of a class period in 2008 reached a new high of more than 800 days – nearly a year longer than the average for all settlements through 2007. The average class period before 2008 was 518 days.
The full report is here .