The filing of securities class actions remained at near record levels through the first half of 2019, according to a report issued by Cornerstone Research titled Securities Class Action Filings, 2019 Midyear Report (here). During the period about 5.2% of U.S. exchange traded firms on an analyzed basis were named in such a suit. The largest number of non-M&A securities class actions were filed in the Second Circuit while M&A related suits were brought in the Third Circuit. The consumer non-cyclical sector drew the most filings during the period while suits involving firms in the communications sector increased significantly.
Key findings from the Report include:
Number of filings: During the first half of 2019 198 securities class actions were filed. That compares to a high of 223 for the first half of 2017, 204 during the same period in 2018 and 223 in 2017.
Mega filings: The number of mega maximum dollar loss filings at 11 eclipsed the average number of such filings at 7 over the period 1997 to 2018.
M&A filings: The number of these filings declined to 72 during the first half of 2019 compared to 91 in 2018 and 2017. The Third Circuit had the most filings at 50 compared to 23 during the same period in the prior year and 23 in 2017.
33 Act Section 11 cases: The number of Securities Act Section 11 cases filed since the decision in Cyan, Inc. v. Beaver County Employees Retirement Fund (March 2018) in 2018 has steadily increased. For example, in the first half of 2019 12 such cases were filed only in state court compared to 6 in the same period in 2018. Seven were filed in both state and federal court compared to the same number during that period in 2018. In contrast, only 6 were filed only in federal court in the first half of 2019 while 7 were brought in that venue in the first half of 2018.
Industry sector: For the current period (annualized) firms in the consumer staples area were the largest group in the S&P 500 named in a securities class followed by those in the industrials and the telecommunications/information technology sector. That compares to the prior year when health care was the leader followed by telecommunications/information technology and consumer discretionary.
Circuit: During the first half of 2019 the Second Circuit had the most securities class action filings at 52 followed by the Ninth Circuit at 29 and Third Circuit at 16. During the first half of 2018 the Second Circuit also had the most filings at 40 followed by the Ninth Circuit at 27 and the Third Circuit at 12.
Overall the number of securities class actions initiated in the first half of 2019 was comparable to similar periods in recent years.