Are lower securities lawsuit filing levels temporary or permanent?
In early July, Stanford University Law School Class Action Clearinghouse and Cornerstone Research jointly issued their mid-year 2007 report on securities class action filings. The report confirmed that 2007 year-to-date filings remain at about the same levels as in 2006 — that is, well below historical averages for the period 1996 to 2005. The report also raises the question of whether lower filing levels are temporary or represent a permanent shift to a reduced level of securities class action filings. The report proposes two alternative explanations for the continued lower filing levels. The first is the “less fraud” hypothesis, and the second is the “strong stock market” hypothesis. The less fraud view, supported by Stanford Law Professor Joseph Grundfest, is that (according to Professor Grundfest) “increased enforcement activity and a heightened awareness among corporate insiders may have led to a shift in the incidence of securities fraud litigation.” The strong stock market hypot
