LAWFUEL – The Legal Newswire – Once-thriving securities-fraud lawsuits, hailed by shareholders and bashed by businesses, are facing an onslaught of legal challenges that could cripple the controversial class actions.
The number of federal securities-fraud lawsuits is steadily falling. Businesses are stepping up their assault on what they call frivolous litigation. Government investigations are chilling plaintiff’s attorneys. And Tuesday, the U.S. Supreme Court will hear arguments in a hotly debated case that may greatly narrow the scope of such lawsuits.
The legal climate has gotten so dicey that some securities-fraud attorneys are seeking new revenue and pursuing litigation in antitrust, consumer products, subprime mortgages, employee pension plans and other areas, says James Cox, a law professor and securities-fraud expert at Duke University.
“It’s getting harder for plaintiffs’ attorneys to make a living,” Cox says.
In the past decade or two, shareholders’ attorneys — representing public pension funds and other institutional investors — have sued hundreds of companies such as Enron, Tyco and WorldCom for accounting fraud, collecting billions of dollars in settlements and legal fees.