July 21, 2005

According to a recent NERA study, the annual probability of a company facing a securities suit that survives a motion to dismiss is 1.2%—only slightly lower than it was before the PSLRA passed. One difference is that nuisance settlements have gone down: more companies are fighting, and getting their cases dismissed. Plaintiffs have apparently responded to the reform by filing more lawsuits and by bringing more lottery-style cases: gigantic multi-billion dollar suits against deep-pocketed outside co-defendants, such as banks in the WorldCom and Enron cases. The ten largest settlements have all taken place since 2000. (via Roberts).