Stay current on changes and developments in corporate law with a wide variety of resources and tools.
April 19 — Accounting-related securities class action filings hit a four-year high in 2015, a new Cornerstone Research report found.
According to the April 19 report, 71 securities class actions involving accounting allegations were filed during the year, compared to the 69 cases seen in 2014 and the 10-year average of 67 filings.
The report said the increase represented “a return to the more traditional types of accounting-related filings.”
The report also showed that total settlement dollars from accounting securities class actions spiked to over $2.6 billion in 2015, almost three times higher than the $905.5 million in 2014.
What is interesting is the report's finding that accounting-related securities class suits made up a “disproportionately high” percentage of all settlements and settlement dollars, Kevin LaCroix, an executive vice president at insurance broker RT ProExec and author of the D&O Diary blog, told Bloomberg BNA in an e-mail.
“For me, the value of this report is to show that securities lawsuits with allegations of accounting misconduct or violations are far more serious than securities lawsuits that don't have accounting allegations,” said LaCroix, who tracks securities class actions through his blog.
The report considers a filing to be an accounting case if it raises allegations related to generally accepted accounting principle violations, auditing violations or weaknesses in internal controls over financial reporting.
Last year there were 80 securities class action settlements approved . According to the Cornerstone report, 62 percent of those settlements (50 pacts) involved accounting cases.
The report said accounting cases may make up such a high proportion of securities class action settlements because these lawsuits are less likely to be dismissed, and thus more likely to be settled.
In other findings, accounting-based cases containing allegations of internal control weaknesses continue to steadily increase. The report found that over the last six years, a majority of accounting cases included such allegations.
“Allegations of internal control weaknesses often accompany lawsuits against companies that have been hit with regulatory issues,” LaCroix said. He added that this trend will continue as “increasingly active regulators pursue investigations and enforcement actions.”
To contact the reporter on this story: Michael Greene in Washington at email@example.com
To contact the editor responsible for this story: Yin Wilczek at firstname.lastname@example.org
The Cornerstone report is available at http://src.bna.com/eeO.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)