Kristin Danley-Greiner Aug. 29, 2016, 3:45pm


WASHINGTON (Legal Newsline) - Attorney Tom Gorman, of Dorsey & Whitney, says he's seen a “record number” of cases involving public companies and individuals involved in regulatory actions.

These actions revolve around such claims as insider trading, market manipulation, financial fraud, accounting and auditing issues, corporate governance matters and Foreign Corrupt Practices Act issues.

Gorman also defends securities class action and derivative suits. A new report from Cornerstone Research says in the first half of 2016, there were 119 new securities class actions filed, compared to 87 filed during the same period in 2015. 

From 1997 to 2015, there were only 94 actions filed. Gorman said the increase could be attributed to a “substantial uptick” in the number of challenges to mergers and acquisitions.

For the current fiscal year, Gorman believes there will be an even higher amount of cases filed than in the previous fiscal year.

“I believe it’s 750 cases or something close to that,” he said. “It was a record number of cases.”

Gorman believes this is because of what he calls the “broken window” in government policy.

“That’s where virtually every action, no matter how small or insignificant, is brought up," he said. "There has been the questioning of how effective it really is to be bringing in large numbers of cases like this. These cases don’t usually generate a large number of dollars, but it does bring about a large number of cases and attention to the issues.”

Gorman said he doesn’t feel this approach is effective in securities regulation or in situations where a senior executive with a company has been “fudging numbers” on financial statements or even someone with inside information being restrained from trading.

“We saw four-dozen small strict liability cases brought in, which are totally different than others, and I think that rationale is questionable at best,” he said. 

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