PricewaterhouseCoopers has released its 2003 Securities Litigation Study. The 10b-5 Daily reports on a number of interesting statistics here as follows:
(1) Of the 175 securities class actions filed in 2003, 107 were accounting-related. The primary allegation in accounting-related cases continues to be revenue recognition issues, alleged in over 50% of these cases.(2) The percentage of cases with union/public pension funds as lead plaintiffs has grown steadily from 1996 (less than 3% of cases) to 2003 (28% of cases).
(3) Average settlement values for all cases settled in 2003 was $23.2 million, up 20% from 2002. There were an increasing number of large settlements, including 6 settlements of more than $100 million.
(4) PwC has begun to track “triple jeopardy” cases, where companies are subject to securities class actions along with SEC and DOJ investigations. There was an all-time high of over 40 of these cases in 2002, but last year saw this number fall to 8 cases (closer to historic norms).
The Study also had this to say about lawsuits against officers and directors:
Chief Executive Officers (“CEOs”) were named as defendants in 98 percent of all cases filed in 2003, up from 94 percent of cases filed in 2002. Chief Financial Officers (“CFOs”) were named as defendants in 86 percent of total cases filed in 2003, while the chairman of the board of directors was named as a defendant in over two-thirds of such cases. Other than not serving at all as a director or officer of an SEC registrant, the safest director or officer positions appear to be general counsel or members of the audit committees of boards of directors – very few cases filed in 2003 named either as defendants in private securities litigation
Also, the Study reports that “the largest numbers of cases filed in 2003 were in the Second and Ninth Federal Circuits, where the litigation epicenters are New York, San Francisco (and the Bay Area), Los Angeles and San Diego.”