Technology, Healthcare Firms Most Likely to be Sued
Technology and healthcare companies top the rankings of US firms most likely to be sued by shareholders this year, based on Audit Integrity’s litigation risk model.
By a wide margin, the dubious honor of “most-likely-to-be-sued” goes to Micron Technologies (NYSE: MU), with a whopping 30% chance. According to Audity Integrity, the percentage likelihood of shareholder suits is almost 19% for Real Networks, Inc. (NASDAQ: RNWK) and InterDigital, Inc. (NASDAQ: IDCC).
Audit Integrity’s Litigation Risk Model is a proprietary assessment of litigation probability “based on a forensic view of its accounting and governance behavior.”
Also high on the litigation risk rankings are healthcare companies: around 14% for Forest Laboratories, Inc. (NYSE: FRX), and Healthsouth Corp., (NYSE: HLS) and 12.% for Altus Pharmaceuticals, Inc. (NASDAQ: ALTU).
Consumer Cyclicals were close behind with Crocs, Inc. (NASDAQ: CROX) at over 10%, The Timberland Company (NYSE: TBL) at almost 9% and General Motors Corporation (NYSE: GM) at 7%.
Financial firms with the highest litigation risk (ranging from over 7% to under 6%) are Citizen’s Republic Bankcorp (NASDAQ: CRBC), National City Corporation (NYSE: NCC) and Fremont General Corporation (FMT).
Audit Integrity said its Risk Ranking model performed well in 2007: 57% of the companies being sued received its highest risk rating, while only 2% of those sued had its lowest risk rating.
The full list of highest risk companies by industry is available here.
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February 22nd, 2008 at 2:03 pm
[...] There is little doubt that one of the consequences of the subprime mess will be an increase in lawsuits. So it comes as no surprise that the topic of shareholder lawsuits was one of the most widely read on Research Recap this week. What is perhaps surprising is that financial firms are not (yet) high on the list of those most likely to be sued by shareholders. According to Audit Integrity, technology and healthcare firms are most likely to be sued. [...]