Eyes On Wall Street : Executive Compensation Lawyers & Attorneys : Labaton Sucharow Law Firm : Class Action Litigation, Shareholder Rights

As the scale of corporate fraud in the last years has grown exponentially, it shouldn’t be surprising that settlement amounts are increasing as well.

This is one of the key findings in Securities Class Action filings—2010 Mid-Year Assessment, issued by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse. This conclusion is echoed in Trends 2010 Mid-Year Study: Filings Decline as the Wave of Credit Crisis Cases Subsides, Median Settlements at Record High, another recent compilation of securities class action litigation settlements issued by NERA, the defense bar’s go-to economic consulting group.

According to the Cornerstone report, federal securities class action activity continued to decrease in the first six months of 2010, to the lowest semiannual level since the first half of 2007. The decline in filings appears to be associated with the waning of our recent cycle of credit-crisis-related litigation. However, the NERA report shows that the median settlement in the first half of 2010 was $11.8 million, more than three times the 1996 median of $3.7 million—continuing a generally upward trend in median settlements. 

Contributed by Yoko Goto

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If there were ever an opportunity for meaningful reform of the banking practices that contributed to the financial crisis, that time is now, when the memory of the recent crash is still fresh. The longer we wait, the less likely we are to see any real change. Less than two years after a financial crisis fueled by lax liquidity and capital requirements for banks, a key banking policy group appears to be backpedaling from its previous proposals for reform.

The Basel Committee on Banking Supervision was developed in 1974 by the central-bank Governors of the Group of Ten Countries. The aim of the Committee is to provide uniform supervisory standards and make recommendations for “best practice” approaches to banking.

Last December, the Committee appeared to be pushing for strong reforms. It proposed new standards calling for, among other things, more stringent capital requirements-- including a new approach to calculating capital. It also called for clearer liquidity standards, and a provision that would force banks to accumulate more capital in times of prosperity. 

Now, in response to pressure from the powerful banking lobby, the Committee seems to have weakened its resolve to encourage meaningful change. Instead of following through with its December promises, the Committee concluded a recent meeting with considerable backtracking, including much softer proposals for capital requirements.

Contributed by James Jackson and Melanie Headley 

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