According to Cornerstone Research’s 2020 Midyear Assessment, the number of securities lawsuits filed in federal and state courts dropped by 18% compared to the second half of 2019, and were at their lowest level since 2016. Kevin LaCroix recently blogged the details over on “The D&O Diary.” Here’s an excerpt:
According to the report, there were 182 securities class action lawsuits filed in state and federal court in the first half of 2020, which while below the 221 filed in the second half of 2019 and 207 filed in the first half of 2019, is still well above the semiannual average of 112 filings during the period 1997-2019. The 182 filings in the year’s first half is the lowest semiannual number of securities suit filings since the second half of 2016. The report states its view that a decline in Section 11 filings “was the primary reason for the overall reduction in filing activity in the first half of the year.”
The decline in the number of filings from the second half of 2019 to the first half of 2020 represented a drop in the number of filings of 18%. Core (or traditional) filings declined 13%, from 134 in the second half of 2019 to 117 in the first half of 2020. Due to the slowdown in merger deal activity, merger objection lawsuit filings also declined, from 87 in the second half of 2019 to 65 in the first six months of this year, representing a decline of 25%. The 65 first half merger-related suit filings in the first half of this year is the fewest number in federal courts since the second half of 2016.
In case you’re wondering, Cornerstone says that 11 COVID-19-related securities class actions have been filed through the end of June. Kevin has been monitoring those filings, and he pegs the number at 15. Lawsuits that Kevin includes in his list that Cornerstone doesn’t are those filed against Zoom, Colony Capital, Wells Fargo and iAnthus Capital Holdings.
Kevin’s blog has links to prior posts that explain why he decided to include these cases in his tally, but as far as I’m concerned, he doesn’t have to explain anything — he’s a fellow Clevelander, so I’ve got his back.
-John Jenkins, TheCorporateCounsel.net July 31, 2020