The Recorder quotes Professor Joseph Grundfest on securities litigation brought against companies in the biotechnology sector. 

An overall slump in securities class action litigation has continued in the first six months of 2014, according to a report from Cornerstone Research. But the outlook is less rosy for the biotech sector, which was hit with twice as many suits as in the two previous six-month periods.

Plaintiffs filed 78 securities class actions in federal court in the first half of this year—18 percent below a seven-year historical average, according to the report compiled in conjunction with Stanford Law School. Those suits claimed combined losses of $93 billion, the lowest semiannual total in 16 years. And for the first time since 1997, there were no so-called mega filings, suits alleging stock losses of at least $10 billion during the class period.As in 2012 and 2013, biotech companies were the most common targets of federal securities class actions in early 2014, according to the report. Together with healthcare and pharmaceutical companies, biotech companies account for 21 percent of suits filed in the first half of 2014. While filings within the Ninth Circuit are also down from the historical average, the region remains one of the country's volume leaders in securities class actions accounting for more than 25 percent of all cases nationwide. With 20 cases filed in the first half of 2014, it ranked behind only the Second Circuit.

Professor Joseph Grundfest, director of Stanford's Securities Class Action Clearinghouse, pointed to a bright spot for plaintiffs lawyers. The Supreme Court's June decision in Halliburton v. Erica P. John Fund upheld the “fraud on the market” doctrine relied on in many class actions.

“Had that decision gone the other way,” Grundfest said in a Cornerstone Research release, “the already low number of class action filings would have been even lower, and would likely be trending toward zero.”