Securities fraud suits overtook securities class action cases for the No. 1 place in the second quarter, while filings alleging a breach of fiduciary duties also picked up, according to a quarterly survey by insurance consultancy Advisen.
Securities filings totaled just 140 in the second quarter, down from 221 in the first quarter. John Molka, a senior industry analyst at Advisen and author of the report, notes that the filings in the first half of the year are in line with first-half totals in previous years.
Just 37 of those second-quarter filings were securities class action suits, down from 70 in the first quarter. Securities fraud suits totaled 51 in the second quarter, or 36% of second-quarter filings, up from 30% in the first quarter. There were 37 breach of fiduciary duty suits filed in the second quarter, or 36% of the cases filed, up from 17% in the first quarter and 10% in all of 2008.
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In an otherwise soft insurance market, the litigation against financial services institutions has kept premiums firm for directors and officers liability insurance. Molka notes that the changing mix of lawsuits means other types of insurance coverage could be invoked more frequently. "[Errors and omissions] and fiduciary duty policies could take a hit," he says. But the financial industry remains the main target of litigators, with 39% of second-quarter lawsuits involving financial services firms, Molka says.
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