Class Action Lawsuits Drop

A new study by the Stanford Law School Securities Class Action Clearinghouse, in cooperation with Cornerstone Research says that the number of new federal class action lawsuits filed by investors has dropped dramatically and is now at its lowest level since 1996.

Just over 60 new class-action shareholder lawsuits were filed in the first six months of 2006, compared with 111 in the first half of 2005. If the trend continues for the rest of the year, the 2006 totals will be 31 percent lower than the 182 lawsuits filed last year.

The study said that part of the decline likely stems from the fact that the stock market was rising and had low volatility from 2005 through May 2006. The study also said that companies have cleaned up their acts in the wake of corporate scandals that included the collapse of Enron Corp. and WorldCom Inc.

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