TheCorporateCounsel.net

NERA Economic Consulting recently released its annual report on securities class actions. Class action filings declined for the 4th consecutive year. Kevin LaCroix recently summarized the NERA report over on the D&O Diary, and here’s an excerpt:

According to the NERA report, there were 205 federal court securities class action lawsuit filed in 2022, down slightly from 210 federal court securities suits filed in 2021. (The NERA report counts multiple suits filed in different circuits against the same defendant as separate lawsuits, as a result of which the NERA count may differ from other published tallies. The NERA report also only counts federal court securities suits, it does not count state court securities filings.)

The recent decline in the number of lawsuit filings relative to the years 2017-2019, when there were annual filings of over 400 new lawsuits, is largely due to “lower levels of merger-objection cases and cases with Rule 10b-5 claims.” The decline in the number of federal court securities suit filings in 2022 represents the fourth consecutive year in the decline in the number of filings.

Lawsuits against companies in the Electronic Technology/Technology & Health Technology and Services sector accounted for 54% of last year’s filings.  More than 1/3rd (36%) of federal class action filings involved unregistered crypto offerings, SPACs or COVID-19-related claims.

It’s important to keep in mind that while merger objection lawsuits aren’t being filed as class actions, they aren’t going away.  This Bloomberg Law article notes that in recent years, plaintiffs have preferred filing these claims in state court, where they can often avoid judicial scrutiny of their settlements as well as the PSLRA’s limitations on the number of times a person can serve as lead plaintiff.

– John Jenkins