The number of securities class action lawsuit filings in the year’s first half was up slightly compared to the number of filings in the first half of 2022, though roughly in line with the long-term average number of half-year securities suit filings. As discussed below, several factors contributed to the number of filings in the first six months of 2023, including the number of crypto and digital currency-related filings and the number of filings related to macroeconomic factors (such as interest rates, labor supply, and inflation). Concerns that drove securities suit filings in recent periods, including COVID-related suits and SPAC-related suits, were less of a factor in the year’s first half.
There were 113 securities class action lawsuits filed in the first half of 2023, compared to 110 in the first six months of 2022. The number of first half filings in 2023 is in line with the 1997-2021 average number of half year filings of 114. The number of first half 2023 filings implies a projected full-year number of filings by year-end 2023 of 226 securities suit filings, which would represent an increase compared to the full-year 2022 total number of filings of 197. Were 2023 to finish the year with a total of 226 securities suit filings, that would represent the highest annual number of securities suit filings since 2020 (when 318 securities suits were filed).
The first half 2023 securities suits were filed against a wide variety of kinds of companies. Companies sued in the year’s first half included companies in 61 different Standard Industrial Classification (SIC) Code Categories (as well as a significant number of companies – for example, crypto companies – that do not have an SIC Code identifier). The single SIC Code category with the highest number of securities suits in the year’s first half was SIC Code Category 7372, Prepackaged Software, which had ten securities suits in the first six months of the year. The SIC Industry Group with the highest number of filings was Industry Group 737, Computer Programming and Data Processing, which had a total of 17 securities suit filings in the first half of the year. Other industrial groups that had significant number of securities suit filings included Industry Group 203, Drugs, which had 11 filings, and Industry Group 602, Commercial Banks, which had 8 filings.
The securities suits filed in the first six months of 2023 were first filed in 34 different federal district courts. The district court with the highest number of first-filed first-half securities suit filings was the Northern District of California, which had 19 securities suits filed in the year’s first half. The Central District of California had an additional eight filings and the Southern District of California had three, bringing the total number of first-filed first-half filings in the California district courts to 30 (representing 26.5% of all first half filings).
The Southern District of New York had 15 first-filed first-half filings, the Eastern District of New York had an additional nine first half securities suit filings, and the Northern District of New York had an additional one filing, brining the total number of first-filed first-half filing in the district courts in New York to 25 (representing about 22% of the first-filed first half filings).
The 55 lawsuits first filed in California and New York in the year’s first six months represent more than 48% of all first half 2023 securities suit filings. In addition to the California and New York courts, there were also 11 first-filed first-half securities suit filings in the District of New Jersey.
There were 18 first-half securities suit filings against non-U.S. companies with U.S. listings, representing about 16% of all securities suit filings in the year’s first six months (roughly in line with the proportion of non-U.S. companies among all U.S.-listed firms). The non-U.S. companies sued in the year’s first six months are based in eleven different countries. The countries with the highest number of U.S. securities suit filings in the year’s first six months were China (with six) and Israel (with three). No other country had more than one company sued in the year’s first six months.
The relatively low levels of IPO and M&A activity during 2022 and the first half of 2023 was reflected in the securities suit filings in the first six months of 2023. There were only five IPO-related securities lawsuits filed in the first half of 2023, including four companies from the IPO class of 2021 and one from the IPO class of 2023. There were only two federal court merger objection securities class action filings in first six months of 2023 – quite a contrast to the period 2017 through 2020, when federal court merger objection suits were a major part of the total number of securities suit filings.
One of the significant factors in the number of 2022 securities suit filings was the number of securities suits filed against crypto and digital currency or digital asset companies. That trend continued in the first six months of 2023, when there were at least nine crypto and digital asset related companies.
Two other factors that contributed significantly to the number of securities suit filings in recent years were the number of COVID-related and SPAC-related securities suit filings. Even though we are now well into the fourth year post-COVID, COVID-related suits are still being filed (although the process of classifying companies as COVID-related is becoming more challenging). By my tally, there were six COVID-related cases filed in the first six months of 2023; by way of comparison, there were nine COVID-related suits filed in the first six months of 2022. There were also six SPAC-related securities suits filed in the first six months of 2023; again, by way of comparison, there were 17 SPAC-related securities suits filed in the first six months of 2022.
Macroeconomic factors made a significant contribution to the number of securities suit filings in the first half 2023. There were five securities suits filed in the year’s first six months containing allegations pertaining to inflation, labor supply, and supply chain issues, plus an additional four suits pertaining to interest rate issues associated with failed or trouble banks.
Some Final Notes about Data and Methodology: I count each company that has been sued in a securities class action lawsuit for essentially the same allegations only once, regardless of the number of complaints actually filed. This counting methodology may differ from the methodology used by other public sources that track securities lawsuit filings, which in turn may cause my tallies to differ from other published tallies.
In tracking the securities lawsuits, I rely on several different sources, including the Stanford Law School Securities Class Action Clearinghouse; Law 360; Justia; ISS Securities Class Action Services; and Stanford Securities Litigation Analytics. I also audit my tally against other resources periodically throughout the year.