Federal securities class action lawsuits against issuers with non-US headquarters, covering sectors including wealth managers, have been rising for more than a decade and reached 31 filings (13.8 per cent of total filings) in 2008, with an average of 18 foreign firms (9.4 per cent of total filings) sued in each year since 1997, new figures show.

So far in 2009, 18 lawsuits have been filed against foreign firms, representing over a fifth of the total. Filings against foreign firms are concentrated in the financial sector, as 42 per cent of the filings in 2008 and 78 per cent of the filings in the first half of 2009 were against such firms. These  are among the findings of a report issued by Stanford Law School and Cornerstone Research.

“Securities litigation activity continues to be driven by claims against financial services firms, but all the large firms in the industry have already been sued. Plaintiffs are therefore filing claims against the smaller number of smaller financial services firms yet to be sued," Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse, said.

“A disproportionate number of recent claims against foreign firms target the financial services sector. The uptick in litigation activity against foreign firms can therefore be viewed as a side-effect of the larger trend to sue financial services firms, wherever they are headquartered. The key question for the plaintiffs is whether they can get jurisdiction in the US courts,” he said. 

Dr John Gould, vice president of Cornerstone Research said: “The continued rise in securities class action filings against foreign firms, as presented in the report’s new metric, underscores the interconnected nature of the credit crisis and the global reach of securities class action litigation."