Compliance
Class Action Securities Fraud Filings at Near Record Levels
Since midyear 2016, plaintiffs have filed more than 750 federal securities class actions, the most prolific 24-month period since enactment of the Private Securities Litigation Reform Act of 1995.
Reported by Lee Barney
Federal class action securities fraud filings continued at near record levels in the first half of this year, according to a new report from Cornerstone Research, “Securities Class Action Filings: 2018 Midyear Assessment.” Since midyear 2016, plaintiffs have filed more than 750 federal securities class actions, the most prolific 24-month period since enactment of the Private Securities Litigation Reform Act of 1995.
After a sharp decline in the second half of 2017, core filings increased 28%. Nine mega disclosure dollar loss (DDL) filings (those with at least $5 billion) and 11 mega maximum dollar loss (MDL) filings (at least $10 billion) lifted market capitalization losses to levels not seen since 2002.In the first half of this year, plaintiffs filed 204 new federal class action securities fraud cases, twice the 1997-2017 semiannual historical average. Core filings, those excluding mergers and acquisitions (M&A) claims, increased 28% in the first half of 2018. M&A claims decreased nearly 9%.
DDL was $157 billion, 162% higher than the historical average. MDL was $643 billion, more than double the historical average.
In the U.S., 4.6% of exchange-listed companies were the subject of core filings in the first half of the year. Core filings against S&P 500 firms in the first half of the year occurred at an annualized rate of 9.6%, the highest since 2002.