NERA Economic Consulting released a study of trends in "shareholder class actions". It concludes that, after a sharp decline in 2006, filings have returned to 2005 levels. Most of the credit goes to cases against subprime lenders and their enablers, NERA reports.
Should you bother to read the consulting firm’s conclusions? No.
For one thing, Blawgletter can’t tell whether NERA’s definition of "shareholder class actions" includes (harder to win) derivative cases. We think it should, but the study doesn’t say — at least as far as we can tell.
For another, the researchers don’t sort out (or try to sort out) possible explanations for the dip-and-recovery of filing numbers. Might the indictment of the leading securities class action firm Milberg Weiss in May 2006 have depressed filings? Um, yes, we bet it did.
Could the spurt in attention to options backdating cases have accounted for the increase in cases during 2007? Yeppur. And, as even NERA points out, the 2007 flood of lawsuits relating to subprime lending explains a lot of the growth in shareholder class actions.
We suspect a publicity stunt. For which we fell. But at least now you know not to do likewise.