There's a surprise. A PricewaterhouseCoopers study says more than half the 201 shareholder class-action lawsuits file last year alleged financial fraud. And the pace will continue, it says.
PWC's 2000 Securities Litigation Study cites increased SEC scrutiny of accounting and financial disclosure issues, more attention on revenue recognition policies in the software and tech sectors, and the number of companies with earnings restatements.
The study says the SEC issued more new litigation releases last year than any time since 1996. Likewise, computer services and telecom accounted for more than 40 percent of all companies sued and about 35 percent of all financial fraud cases are filed after a company announces it will or has restated its financials.
In 2001, "the seemingly high percentage of companies delaying the filing of their annual reports, coupled with the market downturn in late 2000, will likely lead to more shareholder class action suits in coming months," PWC Dispute Analysis & Investigations partner Kerry Francis says in a statement.
And the tech sector should expect more such suits "alleging a company artificially inflated share prices by issuing false and misleading information about the company's growth based on 'new economy' metrics," Francis adds.