The recent upheaval in the U.S. financial industry has generated another flurry of securities class-action lawsuits. During September, investors in 26 companies filed new federal lawsuits, according to RiskMetrics Group’s Securities Class Action Services data as of Sept. 26. In addition, there were nine new cases brought in state courts. The volume of federal filings exceeds the 20 investor cases filed in September 2007, which was soon after the collapse of the subprime mortgage market. (Editor’s note: This data doesn’t include lawsuits filed by the Securities and Exchange Commission.) Even before this latest wave of lawsuits, federal case filings were on pace this year to surpass historical averages, largely because of the continuing investor losses caused by the credit crisis. The pace of filings began to pick up after the U.S. government took over mortgage giants Freddie Mac and Fannie Mae on Sept. 7. The next day, investors sued Fannie Mae and its officers, alleging that they made “materially false and misleading statements” about the firm’s business and prospects and misrepresented the company’s financial statements. Investors also filed a separate lawsuit against the five underwriters who participated in Fannie Mae’s $2 billion preferred stock offering in May. The defendants in that case include Merrill Lynch, Citigroup, Morgan Stanley, UBS Securities, Wachovia Capital Markets, and four senior executives of Fannie Mae. Likew ...
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