July 14, 2021

Securities Litigation: Class Action Filings Drop in 1st Half of 2021

Over on the “D&O Diary,” Kevin LaCroix reports that federal securities class action filings declined significantly during the first half of 2021.  Here’s an excerpt summarizing his findings:

Federal court securities class action lawsuit filings declined in the first half of 2021 to the lowest semiannual levels in several years. Several factors contributed to this relative decline, most significantly the shift by plaintiffs’ lawyers toward filing federal court merger objection lawsuits as individual actions rather than as class actions. In addition, as discussed further below, other factors contributed to the relative decline. The filing levels in the year’s first six months puts the filing for the full year 2021 on pace for the lowest annual filing levels since 2015, after several intervening years in which filings were at historically high levels.

Merger objection class action filings dropped by 81% this year. Unfortunately, that doesn’t mean that the number of those lawsuits is actually declining, but merely that they’re being filed as individual actions. Why? Kevin says it’s to reduce the likelihood of court scrutiny of plaintiffs lawyers’ merger objection mootness fee “racket”.

John Jenkins