Only eight companies in the Standard & Poor’s 500 index were named as defendants in federal securities fraud class-action lawsuits filed in the first half of this year, down from 27 companies in all of last year, according to a report Tuesday from the Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research.
The 1.6% of S&P 500 companies named in the class actions in the first half of this year accounted for in aggregate 3.3% of the S&P 500’s total market capitalization. By contrast, the 5.4% of the S&P 500 companies named in federal class-action cases last year accounted for 11.2% of the index’s total market value.
Index membership and market capitalization are based on the beginning of each year.
“Overall, the level of class actions against S&P 500 companies is historically low both in terms of the number of companies named as defendants and the percentage of market capitalization represented by the defendants,” the report said.
Among all companies publicly traded in U.S. markets, federal court securities class-action filings in the first six months of the year totaled 94, a 9.6% decline from the second half of 2010, the report said. Only 8.5% of the 94 filings named companies in the S&P 500 index, down from 15.4% in the second half of 2010, the report said.
Professor Joseph Grundfest, director of the Stanford class-action clearinghouse, said in a statement about the report: “There appears to be a sea change in the structure of the class-action securities fraud litigation business. The traditional claims that U.S.-based companies have been cooking their books or hyping their stocks are in sharp decline.”
