TheCorporateCounsel.net

Over on The D&O Diary, Kevin LaCroix recently reported some good news for public companies – federal securities class action suits declined sharply last year. Here’s an excerpt with the numbers:

According to my tally, there were 210 federal court securities class action lawsuits filed in 2021, representing a 34% decline from the 320 federal court securities suit filings in 2020. (Please note that these figures reflect only federal court securities class action lawsuit filings; the filing numbers do not include state court securities class action lawsuit filings during the year.)

The 2021 securities suit filing numbers represents an even more dramatic decline compared to the annual average number of lawsuits filed during the 2017-2019 period, a period during which the number of securities lawsuits surged. The annual average number of securities suit filings during the 2017-2019 period was 405; the 210 securities suit filings in 2021 represents a decline of about 48% compared to the elevated annual average level of filings during that recent period.

Kevin says that the biggest factor in the decline in filings last year was the decline in the number of federal court merger objection class action lawsuits. Only 18 federal court merger objection class action lawsuits were filed in 2021, compared to 102 the prior year. He also cautions that the drop in merger objection filings doesn’t mean that those suits aren’t being filed, just that they’re not being filed as class actions. But even after backing out the effect of merger objection lawsuits, traditional securities class action filings during 2021 still dropped by 11.9% decline from 2020.

– John Jenkins