Expert Commentary

D&O Litigation Trends in 2012

Federal securities class action filings declined in the fourth quarter of 2012, after 2011 and 2012 saw filing at roughly the same pace as previous years. As first observed in 2010, suits objecting to merger and acquisition (M&A) transactions continue to make up a significant proportion of total filings, although these cases are now being filed in state court rather than federal court. The Federal Deposit Insurance Corporation (FDIC) continues to prosecute cases involving bank failures arising out of the financial crisis and appears to have a number of additional cases in the pipeline, while the Security and Exchange Commission's (SEC's) emphasis on individual accountability has led to increased settlements with individuals.

Professional, D&O, and Fiduciary Liability
February 2013

Federal securities class action filing levels remained relatively consistent with prior years in 2011 and 2012, although the fourth quarter of 2012 saw a large decrease in filing activity. Filings relating to the financial crisis and Ponzi schemes markedly decreased in 2011 and 2012 relative to previous years. M&A objection suits and litigation against Chinese companies made up the largest subsets of 2011 filings, but both types of filing receded significantly in 2012 (with merger cases increasingly being filed in state court rather than federal court). Opt-outs have increased in recent years to the point that major securities class action settlements often now involve significant opt-out litigation. The FDIC increased its failed bank litigation activity in 2011 and 2012, while actual bank failures and seizures are becoming less frequent.

Additional FDIC litigation activity can be expected, as the FDIC is approaching the end of the 3-year statute of limitations period for many bank failures. The SEC's stated focus on individual accountability has been marked by a high number of settlements at high amounts. We discuss these and other recent directors and officers (D&O) litigation trends below.

Securities Class Action Filing Steady until Sharp Decrease at Year End

Likely due to their methodological differences, three leading analytics firms reported different filing trends during 2011 and 2012, although 2012 saw less filing activity than 2011. On balance, it appears that filings levels were relatively consistent with prior years, despite a changing mix in the type of cases filed.

According to Cornerstone Research, the 152 federal securities fraud class actions filed in 2012 represented a sharp decrease from the 176 filings in 2010 and the 188 in 2011 (all below the annual average of 193 between 1997 and 2011). The 2011 filings were evenly split between the first and second half of the year, as well as among the quarters, unlike 2010, which saw volatility from quarter to quarter and a dramatic uptick in filing activity in the second half. In 2012, filing activity decreased in the second half (64 filings compared to 88 in the first half), particularly in the fourth quarter. Indeed, the second-half filing level in 2012 was the lowest seen since the second half of 2006, which was itself notable at the time, and the 25 actions filed in the fourth quarter of 2012 were the fewest filed in any quarter in the past 16 years.1

NERA Economic Consulting, meanwhile, projected 213 filings in 2012, a decrease from the 2011 total, but roughly in line with the annual average of 217 filings since the passage of the Private Securities Litigation Reform Act (PSLRA) in 1996 and the 2007–2011 average of 221.2 This followed a slight decrease (3.9 percent) in federal securities class action filings in 2011, to 225 in 2011 from 241 in 2010.

A third industry analyst, Advisen, reported that the total number of "securities suits" (which includes non-class action litigation, such as regulatory actions and derivative actions, in addition to securities class actions) fell from 2,043 in 2011 to 1,616 in 2012, which is nonetheless higher than in 2010 and prior years.3

Both Cornerstone and NERA reported that filings relating to the financial crisis and Ponzi schemes decreased dramatically in the past 2 years. Cornerstone reported only 3 federal securities class action filings relating to the financial crisis in 2011 and none in 2012, down from 13 in 2010 and 53 in 2009.4 NERA reported 4 such filings in 2012 and 13 in 2011, down significantly from prior years' totals: 35 in 2010, 59 in 2009, and 103 in 2008 (representing roughly 40 percent of all filings related to the financial crisis). NERA notes that "cases related to the credit crisis, which had been prominent in recent years, have all but ended" and suggests that this decline should be expected given "the passage of time since the extreme market turbulence of late 2008 and early 2009" and the applicable statutes of limitations.5 Cornerstone reported no Ponzi scheme filings in 2011, and NERA reported 3.6 Neither firm mentioned any 2012 Ponzi scheme filings in 2012, suggesting that these cases, also arising out of the financial turmoil of the credit crisis, have all but ended. Additionally, there were no new filings related to auction rate securities, and lawsuits regarding complex financial instruments, such as mortgage-backed securities and collateralized debt obligations, have reverted to their 2005–2006 levels after years of heightened filing activity in this area.7

Filings against financial sector companies generally also decreased in 2012 from prior years, from 24.7 percent of all filings in 2010, to 13.3 percent in 2011, to 10.0 percent in 2012, likely as a result of the decrease in new litigation concerning the financial crisis.8 NERA put the 2011 proportion at 16 percent and contrasts that with 2008 and 2009, when roughly half of new federal securities class actions were directed at companies in the financial sector. The trend continued through the first half of 2012, for which NERA reported that only 11 percent of securities class actions were filed against financial companies as the primary defendants. No other sector currently dominates filings the way the financial sector did in 2008 and 2009, although the electronic technology and technology services sector and the health technology and services sector have been targeted the most, both in 2011 and the first half of 2012 (with each representing over 20 percent of total filings in the first half of 2012).9

While filings relating to the financial crisis have abated in the past 2 years, the total number of filings remained relatively stable largely due to the prevalence of other types of lawsuits: litigation filed in 2011 against Chinese companies in connection with reverse mergers; M&A objection suits filed in 2011 and 2012; and so-called say-on-pay litigation regarding executive compensation filed in 2012. Currently, Chinese reverse merger class actions appear to have receded and M&A objection filings have largely moved to state court. However, no "one-off" event or phenomenon currently dominates filings as in the past, such as with the initial public offering (IPO) laddering cases in 2001, options backdating cases in 2006, and, most recently, financial crisis cases.

Historically, most securities class actions have been filed in the Second Circuit Court of Appeals (which includes New York) and the Ninth Circuit (which includes California). While this trend continued in 2011 and 2012 with respect to filings generally, M&A filings were more evenly distributed among the 12 federal circuits and state courts such as Delaware.10 Additionally, the Ninth Circuit saw a dramatic decrease in filings in 2012, which Cornerstone attributes to a decline in M&A and Chinese reverse merger filings in 2012.11

Two measures of market capitalization losses alleged in newly filed complaints—disclosure dollar loss (DDL) and maximum dollar loss (MDL)—both decreased in 2012 after increasing in 2011. Over the past 3 years, both metrics have remained below historical averages. DDL represents market capitalization losses at the end of each class period (i.e., the change in market capitalization between the trading day immediately preceding the end of the class period and the trading day immediately following the end of the class period). MDL represents maximum market capitalization losses over the entire class period (i.e., the change in market capitalization from the trading day with the highest market capitalization during the class period to the trading day immediately following the end of the class period).

Aggregate Maximum Dollar Loss (MDL)

These somewhat unsophisticated measures do not seek to isolate stock price movement related to lawsuit allegations from other factors impacting market capitalization and therefore are not necessarily indicative of liability or potential damages. Both measures are nonetheless useful for analyzing filing trends generally. DDL for all class actions filed during 2012 totaled $98 billion, compared to $110 in 2011 and $73 billion in 2010, all below the annual average of $128 billion from 1997 through 2011. Similarly, MDL has remained well below the 1997–2011 average of $669, with total MDL figures of $474 billion in 2010, $511 billion in 2011, and $405 billion in 2012.12

In years past, including 2011, a handful of "mega" filings accounted for a majority of the total market capitalization losses associated with securities class actions. 2012 saw fewer mega filings, representing a smaller component of DDL and MDL indexes. In 2012, four filings involved a DDL of at least $5 billion, representing 44 percent of the total DDL for all 2012 filings. This is lower than the proportion of mega DDL filings in 2011 (57 percent) and lower than the 1997–2011 average (56 percent). Similarly, 10 2012 filings involved an MDL of at least $10 billion, representing 55 percent of the total MDL for all 2012 filings. As with DDL, 2012's MDL proportion decreased relative to the proportion of mega MDL filings in 2011 (77 percent) as well as the 1997–2011 average (74 percent).13

Aggregate Dollar Disclosure Loss (DDL)

M&A Class Actions Are a Large Proportion of Filings

In both 2012 and 2011, a significant proportion of new federal class action filings were actions objecting to merger transactions. Federal filings declined somewhat in 2012, as plaintiffs began to litigate these cases in state court more often. Typically, these merger objection suits allege that directors and officers breached fiduciary duties by failing to maximize shareholder value in a merger or other business combination, including failing to solicit competing bids, accepting deal terms that discouraged competing offers, permitting various conflicts of interest, and failing to adequately disclose information about the deals to shareholders.14 These lawsuits have become common, now accompanying nearly every merger.

Cornerstone reported only 13 such suits filed in 2012 (or 8.5 percent of all federal securities class actions), down significantly from 43 filings in 2011 and 40 in 2010. Cornerstone attributes this decline to plaintiffs filing these cases almost exclusively in state court now. By contrast (and certainly due to different methodology), NERA reported 26 filings (22.4 percent of all filings) in the first half of 2012. NERA put the 2011 total at 61 (or 29 percent of all filings), down from 68 in 2010. NERA notes that M&A objection cases are fundamentally different from typical shareholder actions in that they are filed on behalf of all shareholders of the company targeted in the M&A deal, rather than on behalf of a class of persons who transacted in certain securities over a certain period of time.15

As noted above, many additional M&A cases are filed that are not federal securities class actions, such as state court filings and derivative suits and other non-class action filings. Including these in the definition of "M&A filings," Cornerstone reports that 789 lawsuits were filed in connection with transactions announced in 2010; 740 were filed regarding 2011 deals; and 67 lawsuits were filed through late March 2012. (Cornerstone's figures include only U.S. companies valued at or above $100 million.) Although M&A activity has decreased compared to 5 years ago, there are more lawsuits overall because more lawsuits are filed in connection with each deal (2.8 lawsuits per deal in 2007, 6.2 in 2011) and more deals are being challenged. Indeed, roughly half of deals worth over $500 million became the subject of litigation in 2007, but nearly all such deals led to litigation in 2011. Filings have not been limited to the largest M&A transactions; many smaller deals ($100–$500 million) resulted in multiple lawsuits.16

A decade ago, the majority of M&A settlements (at least for lawsuits filed in Delaware) included cash awards, with only 10 percent settling for additional disclosures only. These figures have traded places recently, as only 10 (5 percent) of 202 unique reported settlements relating to 2010 and 2011 M&A deals included cash payments to shareholders, while 166 (83 percent) involved additional disclosures only.17

Regulatory and Enforcement Activity

Suits by regulators and law enforcement agencies continued to be one of the most active types of "securities suits," with filings up from 499 in 2010 to 566 in 2011 according to Advisen. (Advisen has not yet released figures for 2012.) These suits represented 36 percent of the total securities suits filed in 2011. Forty-two percent of the regulatory and enforcement filings targeted financial firms and their directors and officers, which, as in recent years, was more often than in any other sector.18

Bank failures and seizures by regulatory authorities subsided in 2012 relative to 2010 and 2011. There were 157 seizures in 2010 and 92 in 2011, but only 50 in 2012 through mid-December (on pace for 52 in 2012).19 In contrast, the FDIC's failed bank litigation is increasing. In the wake of the financial crisis, the FDIC began to file failed bank litigation in 2010, filing 2 lawsuits that year. In 2011, FDIC more actively pursued litigation, filing 16 lawsuits against 127 directors and officers of failed financial institutions.20 Through mid-December 2012, the FDIC filed an additional 23 lawsuits. Through mid-December 2012, the FDIC has filed a total of 41 lawsuits against 324 directors and officers of failed banks.21 Because the median period of time between a bank failure and the filing of suit by the FDIC is just under 3 years (owing to the 3-year statute of limitations), the current increase in FDIC litigation activity closely corresponds to the increase in bank failures and seizures beginning about 3 years ago.22 (Of course, nonpublic tolling agreements between the FDIC and directors and officers can increase the statutory time limit.) NERA estimates that if the FDIC's current filing pace continues, the FDIC will ultimately sue directors and officers of 20 percent of failed banks (86 total).23

Generally, the FDIC appears to be less litigious following the recent financial crisis than it was following the savings and loan crisis. The FDIC's litigation filings have generally targeted directors and officers of institutions that had a large asset base and a high estimated cost of failure, although more recent filings have targeted smaller, less costly institutions. Nine percent of financial institutions that have failed since 2007 have been the subject of FDIC lawsuits, and lawsuits have been authorized against another 9 percent.24 Stated differently, as of January 15, 2013, the FDIC had authorized lawsuits against 788 individuals in connection with 95 failed institutions and had filed 45 lawsuits against 355 individuals, meaning 433 individuals could still face lawsuits by the FDIC.25 Indeed, the FDIC recently filed its first D&O lawsuit of the year on January 17, 2013, against Charter Bank, New Mexico. Given the 3-year statute of limitations and the number of bank failures roughly 3 years ago, the FDIC's heightened litigation activity can be expected to continue through 2013.

The defendants named in the 41 lawsuits filed through Mid-December 2012 include inside directors only (11 cases); inside directors and outside directors (30 cases); chief executive officers (36 cases); chief financial officers (7 cases); chief loan officers (10 cases); chief credit officers (15 cases); chief operating officers (8 cases); and chief banking officers (2 cases). Some of the lawsuits against directors and officers also name insurance companies (3), law firms (1), and spouses of directors and officers (3) as codefendants. Other associated parties, such as accountants, appraisers, and brokers, are also potential FDIC targets. (Cornerstone's reporting focuses on actions against directors and officers and does not track FDIC suits filed against other parties.)26 In another development, the FDIC filed its first suit since the financial crisis against an outside auditor in October 2012, alleging over $1 billion in damages against PricewaterhouseCoopers and Crowe Horwath.27

Defendants in 2012 Failed Bank Lawsuits

The FDIC obtained a $168.8 million jury verdict against three former officers of IndyMac Bank in December 2012.28 The jury found that the officers were negligent and breached fiduciary duties in connection with 23 construction loans issued by the company. The verdict represents the first phase of the trial (the FDIC is seeking total damages of over $350 million). The case was the first filed by the FDIC in the wake of the financial crisis. IndyMac's failure was estimated to have cost $13.0 billion, the highest of any of the 467 failures since 2007.29

An insurance coverage issue that has arisen anew in the FDIC's bank failure cases is the applicability of "insured versus insured" exclusions in D&O liability policies, where the FDIC has sued on behalf of a failed insured institution. Only two courts have ruled on this issue in the current wave of FDIC litigation, both finding that the exclusions did not apply to bar coverage. Both courts found that the FDIC has multiple roles statutorily, including not only acting as receiver for failed institutions, but also acting on behalf of depositors, account holders, and a depleted insurance fund.30

Meanwhile, the SEC has demonstrated "a continued commitment to hold individuals accountable for corporate decisions." The SEC settled 714 cases in 2012, the most since 2007 and up 6.6 percent from 670 in 2011. 537 of these settlements were with individuals, the most since 2005, and 118 involved inside trader allegations, the highest number ever. Settlements involving allegations of Ponzi schemes hit a post-Sarbanes-Oxley record of 92 in 2012. The median SEC settlement with a company in 2012 was $1.0 million, down from $1.4 million in 2011, whereas the median settlement with individuals rose to $221,000, more than double the median of $103,000 in 2009. Sixteen Foreign Corrupt Practices Act cases were settled in 2012 with a median settlement value of $5.5 million.31

Chinese Reverse Merger Class Actions

In 2010 and 2011, 40 class actions were filed against Chinese companies that accessed U.S. markets through a "reverse merger" process. Only 10 were filed in 2012. These class actions generally include accounting allegations, such as generally accepted accounting principles violations and restated financials, allege violations of Rule 10b–5, and involve equity securities. None involves insider trading allegations. A significant number of securities class actions filed in 2011 named Chinese issuers and their directors and officers as defendants: 16.5 percent of all 2011 securities class action filings, or 31 of 188. These lawsuits were first filed in 2010, and the filing frequency of these actions appears to have peaked in the first half of 2011 (24 lawsuits), slowing to only 9 filings in the second half of 2011 and 10 in all of 2012.32

While filings of this type appear to be on the decline, pending cases continue to make their way through the courts. Some have been dismissed at the pleading stage. One securities case against a Chinese company was dismissed earlier this year because the plaintiffs failed to sufficiently allege false and misleading statements in offering materials. While the case did not involve a reverse merger, it did involve a Chinese company listed on a U.S. exchange.

Chinese reverse merger cases that have survived motions to dismiss have presented additional challenges for plaintiffs, including class certification. In the first case involving a Chinese company listed in the United States through a reverse merger to reach the class certification stage, for example, the court refused to certify a class, finding that the plaintiffs had failed to sufficiently allege that the company's shares traded in an efficient market. The plaintiffs needed to establish the existence of an efficient market to utilize the "fraud on the market" theory of reliance to establish the requirement for class certification that common questions among class members predominate over individual questions. The Chinese company's securities were so thinly traded that the court could not conclude that the market for them was efficient.33

In addition to the problems plaintiffs in these cases are encountering at the motion to dismiss stage and class certification stage, cases that have settled have resulted in relatively small settlements. The first Chinese reverse merger case to survive a motion to dismiss, for example, settled for $2 million in insurance funds.34 Others have settled for $3 million in insurance funds35 and $800,000 ($600,000 of which was funded by insurance).36


As with the variation in reported filing trends, different firms reported different settlement statistics as well, due to their different methodologies. According to NERA, the average securities class action settlement declined dramatically to $23 million in 2011 from $92 million in 2010. Annual averages are skewed, however, by very large and very small outlier settlements, including the $7.2 billion Enron settlement in 2010, other settlements in excess of $1 billion, and 309 small settlements of IPO laddering cases in 2009. Ignoring these aberrational settlements (and merger objection cases), the average securities class action settlements for 2011 and 2012 were $31 million and $36 million, respectively, down from $40 million in 2010, but consistent with the 2005–2011 average of $32.1.37 According to Cornerstone, however, the average reported securities class action settlement in 2011 was $21.0 million, down from $36.3 million in 2010, and well below the average of $55.2 million since firms began compiling this data after the enactment of the PSLRA in 1996 (although this average drops to $39.9 million if the three largest settlements—WorldCom, Enron, and Tyco—are excluded).38 Cornerstone has not yet reported settlement data for 2012. According to Advisen, the average securities class action settlement in 2012 was $51.8 million, up from $34.9 million in 2011. Breach of fiduciary duty lawsuit settlements averaged $19.4 million in 2012, and settlements of securities fraud lawsuits averaged $8.4 million. Shareholder derivative suits, which often involve no monetary component, averaged a $4.9 million settlement in 2012. The largest settlement of 2012 was a $2.4 billion tentative settlement by Bank of America of a lawsuit brought in connection with its acquisition of Merrill Lynch.39

The median settlement amount decreased to $7.5 million in 2011 from $11 million in 2010, and then increased to $11.1 million in 2012, the highest annual median settlement value reported by NERA since the passage of the PSLRA in 1996. 2010 was only the second year in which the median exceeded $10 million. By contrast, Cornerstone reported that the median settlement amount for securities class action settlements in 2011 was $5.8 million, a significant decline from a median of $11.3 million in 2010 and the lowest annual median settlement since firms began compiling this data after the enactment of the PSLRA.40

Investor losses can be a rough proxy for the "size" of cases, although they are not measures of liability or damages. Investor losses can, however, aid in predicting approximate settlement values, due to a strong statistical correlation between investor losses and settlement values. Median investor losses in settled cases declined to $497 million in 2011 from $584 million in 2010, the highest level on record (with the 2011 median the second-highest). The median of investor losses for the first half of 2012, which is the most current figure available for 2012, was $1.179 billion. While this amount dwarfs every full-year measure, it was based on a small number of settlements, and the full-year median will likely be much lower. (The previous year may be illustrative: the median for the first half of 2011 was $911 million, but the full-year median was $497 million.)41

There was a dramatic decrease in the number of settlements and dismissals of federal securities class actions in 2012, per NERA. In 2010, 2011, and 2012, settlements totaled 131, 123, and 92, respectively, and dismissals totaled 124, 123, and 60, respectively. In total, 152 cases were resolved in 2012, compared to 255 in 2010 and 246 in 2011. The reason for this drop is unclear but may be due to the pendency of fewer cases at the beginning of 2012 or delays in resolving cases pending the Supreme Court's ruling in the Amgen case.42 Depending on how the court rules in that case, obtaining class certification in securities cases could become more difficult for plaintiffs.

2011 also saw an increased use of so-called blow-up provisions in settlement agreements, a trend that continued through at least the first half of 2012. Blow-up provisions allow for settlements to be terminated if a specified number of class members (or percentage of the class) opt out of the settlement. In 2011, a record 39.5 percent of settlement agreements included blow-up provisions. That proportion—which had never before exceeded 30 percent—increased slightly to 40 percent in the first half of 2012. NERA speculates that this could reflect an increased prevalence of opt-outs, but it may merely reflect an increased desire by class action defendants for finality.43

Indeed, opt-out litigation now appears to be a more or less standard feature of large securities class action litigation. In 2011, several large public pension funds and mutual funds opted out of a $624 million Countrywide subprime-related class action. More recently, 134 investors opted out of a $950 million Citigroup subprime-related class action, and 7 public pension funds and dozens of mutual funds opted out of a Pfizer securities settlement. It appears that plaintiffs (correctly) believe they can obtain greater recoveries via opt-out litigation as opposed to participating in the class settlements.

*W. Joel Vander Vliet is an associate with Boundas, Skarzynski, Walsh & Black LLC. He has extensive experience with professional liability claims and insurance policies, including directors and officers liability, insurance company liability, insurance brokers errors and omissions, and employment practices liability claims and policies. Mr. Vander Vliet is a graduate of the University of Michigan Law School and can be reached at (312) 946–4219 or <%=Irmi.Common.WebHttpRequest.CreateJavaScriptEmailLink("[email protected]")%>.

1"Securities Class Action Filings—2012 Year in Review." Cornerstone Research (Jan. 2013) ("2012 Cornerstone Report"); "Securities Class Action Filings—2011 Year in Review." Cornerstone Research (Jan. 2012) ("2011 Cornerstone Report").

2"Flash Update: 2012 Trends in Securities Class Actions." Dr. Renzo Comolli, Dr. Ron Miller, Svetlana Starykh, and Sukaina Klein. NERA Economic Consulting (Dec. 11, 2012) ("2012 NERA Report"); "Recent Trends in Securities Class Action Litigation: 2011 Year-End Review." Dr. Jordan Milev, Robert Patton, Svetlana Starykh, and Dr. John Montgomery. NERA Economic Consulting (Dec. 14, 2011) ("2011 NERA Report").

3"D&O Claims Trends: 2012 Wrap Up." David Bradford, Jim Blinn. Advisen Ltd. (Jan. 2013) ("2012 Advisen Report").

42012 Cornerstone Report; 2011 Cornerstone Report.

52012 NERA Report; "Recent Trends in Securities Class Action Litigation: 2012 Mid-Year Review." Dr. Renzo Comolli, Dr. Ron Miller, Dr. John Montgomery, and Svetlana Starykh. NERA Economic Consulting (July 24, 2012) ("2012 NERA Mid-Year Report"); 2011 NERA Report.

62011 Cornerstone Report; 2011 NERA Report.

72012 Cornerstone Report; 2012 NERA Report.

82012 Cornerstone Report; 2011 Cornerstone Report.

92011 NERA Report; 2012 NERA Mid-Year Report.

102011 NERA Report; "Recent Developments in Shareholder Litigation Involving Mergers and Acquisitions." Robert M. Daines and Olga Koumrian. Cornerstone Research (March 2012) ("Cornerstone M&A Report").

112012 Cornerstone Report.



142011 Cornerstone Report; Cornerstone M&A Report.

152012 Cornerstone Report; 2011 NERA Report; 2012 NERA Mid-Year Report.

16Cornerstone M&A Report.


182011 Advisen Report.

19"Characteristics of FDIC Lawsuits against Directors and Officers of Failed Financial Institutions." Cornerstone Research (Dec. 2012) ("Cornerstone FDIC Report").

20"Characteristics of FDIC Lawsuits against Directors and Officers of Failed Financial Institutions." Cornerstone Research (May 2012) ("Cornerstone May FDIC Report").

21Cornerstone FDIC Report.

22Cornerstone May FDIC Report; "Trends in FDIC Professional Liability Litigation: Insights and projections based on the FDIC's first 27 suits." Paul J. Hinton and Zachary Slabotsky. NERA Economic Consulting (May 31, 2012) ("NERA FDIC Report").

23NERA FDIC Report.

24Cornerstone FDIC Report.

25FDIC Update: Professional Liability Lawsuits, available at (last accessed Jan. 28, 2013).

26Cornerstone FDIC Report.

27Federal Deposit Ins. Co. v. PricewaterhouseCoopers LLP, No. 2:12–cv–957 (M.D. Ala.), filed Oct. 31, 2012.

28Federal Deposit Ins. Corp. v. Van Dellen, No. 10–cv–4915 (C.D. Cal.).

29Cornerstone FDIC Report.

30Progressive Cas. Ins. Co. v. Federal Deposit Ins. Corp., No. 1:12–cv–1103 (N.D. Ga. Jan. 4, 2013); W Holding Co., Inc. v. Chartis Ins. Co.-Puerto Rico, No. 11–2271 (D.P.R. Oct. 23, 2012).

31"SEC Settlement Trends: 2H12 Update." Jorge Baez, Dr. Elaine Beckberg, and Dr. James A. Overdahl. NERA Economic Consulting (Jan. 14, 2013) ("NERA SEC Report").

322012 Cornerstone Report; 2011 Cornerstone Report; 2011 NERA Report.

33Dean v. China Agritech, Inc., No. 11–1331 (C.D. Cal.) (May 3, 2012, order).

34Press Release, Orient Paper Inc. Announces Proposed Settlement of Securities Class Action Lawsuit (June 21, 2012), available at

35Goldstein v. Tongxin Int'l Ltd., No. 2:11–cv–348 (C.D. Cal.) (Mar. 15, 2012, stipulation of settlement).

36Arghese v. China Shenghuo Pharmaceutical Holdings, Inc., No. 1:08–cv–7422 (S.D.N.Y.) (Nov. 12, 2010, stipulation and agreement of settlement).

372011 NERA Report; 2012 NERA Report.

38"Securities Class Action Settlements—2011 Review and Analysis." Cornerstone Research (2012) ("2011 Cornerstone Settlements Report").

392012 Advisen Report.

402012 NERA Report; 2011 Cornerstone Settlements Report.

412012 NERA Mid-Year Report; 2011 NERA Report.

42The U.S. Supreme Court heard oral argument in Amgen, Inc. v. Connecticut Retirement Plans & Trust Funds (No. 11–1085), on November 5, 2012. At issue is the "fraud on the market" presumption of indirect reliance in securities class actions. Specifically, the court is considering whether plaintiffs must prove the materiality of alleged misstatements at the class certification stage in order to rely on the presumption. If the court holds that they must prove materiality, it will make prosecuting securities class actions more difficult for plaintiffs.

432012 NERA Mid-Year Report; 2011 NERA Report.

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