Robert W. Wood (Robert W. Wood, P.C., San Francisco) has published Capital Gain or Ordinary Income:  How Securities Lawsuit Recoveries Are Taxed, also available on the Tax Analysts web site as Doc 2005-16770, 2005 TNT 152-26.  Here is the Conclusion:

More and more taxpayers seem to be recovering amounts related to investments from lawsuits and arbitration proceedings. More and more companies, banks, brokerage firms, and investment advisers seem to be falling subject to those claims. Because the tax issues for the recovering plaintiffs revolve around ordinary income vs. capital gain and gain vs. basis recovery issues, the federal income tax stakes can be high.