Federal securities fraud class action activity in 2009 was down sharply compared to 2008 and historical averages, according to Securities Class Action Filings 2009: A Year in Review.

The annual report prepared by the Stanford Law School Securities Class Action Clearinghouse in cooperation with Boston’s Cornerstone Research found 169 federal securities class actions were filed in 2009, a 24 percent decline from the 223 observed in 2008, and 14 percent below the average of 197 observed between 1997 and 2008.

Litigation activity related to the credit crisis declined even more markedly from 100 filings in 2008 to 53 in 2009, a 47 percent decrease. Just 17 of those filings occurred in the second half of 2009.

Market capitalization losses attributable to 2009 filings, as measured by Disclosure Dollar Loss (DDL) and Maximum Dollar Loss (MDL), decreased from 2008 levels by 62 percent to $83 billion and by 24 percent to $634 billion, respectively.

Plaintiff law firms also filed a much larger number of lawsuits long after the date on which the alleged fraud was disclosed to the market, the report found. The filing of these delayed class actions was particularly notable in the second half of the year when the median filing lag was 100 days, more than three times the historical average.

"Historically, periods of high market volatility coincide with a greater level of securities class action filings. After sharply rising for two years, market volatility decreased in the first half of 2009 and then fell again in the second half of the year," said John Gould, senior vice president of Cornerstone Research. "In that sense, it’s no surprise that filings decreased this year."