Securities class actions filed in 2008 were substantially more numerous than those filed in 2007 and almost double those filed in 2006. The subprime mortgage meltdown, the resulting financial markets crisis, the auction-rate securities debacle, and Ponzi scheme litigation have all contributed to this increase. Approximately half of all the securities class actions filed in 2008 were related to the financial markets crisis, many of which were filed in the final three months. We expect that the overall high level of securities class actions will continue well into 2009, particularly if the financial markets crisis continues to worsen. In this connection, December 2008 saw the first of the cases arising out of the several wellpublicized Ponzi schemes that have now come to light, and we expect more of these cases (see also Madoff Ponzi Scheme on page 18). However, the number of auction-rate securities cases has fallen off, as most of the problems in that area seem now to have surfaced (and in many instances to be well on the way to resolution).

The most prominent category of defendants in the current wave of securities class actions has been firms in the financial products and services sector. Nevertheless, many other types of companies, as well as numerous natural persons, have also been swept in as defendants. For example, a number of companies outside the financial products/ services sector that had exposure to Lehman Brothers, Fannie Mae, or Freddie Mac have been the target of securities class actions related to the financial difficulties those entities have experienced.