Each year, PwC’s Securities Litigation Study evaluates the private securities class action suits filed in the previous calendar year. In completing this, our seventeenth annual evaluation, it became clear that 2012 marked a significant departure: For the first time in the history of our reports, we were faced with a year that lacked any kind of sweeping, game-changing SEC rule or mandate, market driven event, or industry practice gone wrong. Rather, 2012 was a year that implied no clear direction as to where regulators or shareholders may focus in the future.
Overall, federal securities class action filings in 2012 were down by about 10% from 2011. The 172 cases filed was a 5% drop compared to the annual average number of cases filed since the enactment of the Private Securities Litigation Reform Act of 1995 (PSLRA), and a 3% dip below the annual average number of cases filed since the enactment of SOX.
While the 10% decline may at first blush seem insignificant, a closer examination reveals that 2012 started very differently than it ended. The first half of 2012 saw 96 cases, or an average of 48 cases per quarter, consistent with the quarterly average of 48 cases during 2011. Further, 34 of 96 cases during the first half of 2012 were accounting-related (35%), again consistent with the 39% of cases that included accounting allegations during 2011. In stark contrast, the second half of 2012 declined to 76 cases, of which only 22% included accounting allegations.
Other notable findings in the 2012 study include:
This year's report examines the forces behind the numbers.