The number of federal court securities class action lawsuit filings in the first half of 2023, if annualized, suggests a year-end total number of filings that would represent a 15% increase over the number of filings in 2022, according to a new report from NERA Economic Consulting. The report, which is entitled “Recent Trends in Securities Class Action Litigation: H1 2023 Update,” also reports that while average securities suits settlement values were down in the year’s first half compared to 2022, the median suit settlement increased compared to 2022. A copy of the August 2, 2023, NERA report can be found here. NERA’s August 2, 2023 press release regarding the report can be found here.

According to the report, there were 118 federal court securities class action lawsuit filings in the first six months of 2023. NERA’s tally may differ slightly from other published tallies; although the recently published report contains no notes describing NERA’s counting methodology, in past reports, NERA has indicated that it counts complaints filed in different district courts against the same defendant as separate lawsuits unless and until the separate actions are consolidated; this methodology results in a slightly higher current case count than tallies that count each case against a defendant only once, regardless of the number of complaints filed. The NERA tally includes only federal court securities suit filings; it does not include state court securities suit filings.

A first half tally of 118 securities suit filings suggests a full-year total number of filings of 236, which would represent a 15% increase compared to the 205 securities suit filings in 2022. A full-year total of 236 filings would represent the highest annual number of filings since 2020, although still well below the 333 such filings in 2020.

According to the report, traditional (or core) securities suit filings accounted for 105 of the first half filings. There were four class action merger objection lawsuits filed and eight crypto unregistered securities cases, which is consistent with the number of such filings in 2022.

If the merger objection and crypto cases are disregarded, the sectors with the highest number of securities suit filings in the year’s first six months are the electronic technology and technology services sector, which accounted for 23% of new filings, and the finance sector, which  accounted for 22% of new filings. Partly due to the decline in the number of COVID-19-related securities suits filed in the year’s first half compared to the number filed in 2022, the percentage of suits filed against companies in the health technology and services sector declined by half to 13% of suits filed in the first half.

As far as the type of allegations in the traditional or core cases, the most common allegations in the year’s first six months related to misled future performance (32% of filings) and regulatory issues (29%). The number of cases involving merger integration-related issues declined by half to 8%, largely due to a decline in the number of SPAC-related filings.

76 securities suits were resolved in the year’s first six months, 41 by dismissal and 35 though settlement. Were the number of case resolutions to remain on the same pace for the remainder of the year, the year-end number of case resolutions would be 152, which “would mark the lowest recorded level in the past 10 years and a decline of 29% relative to 2022.”

The average settlement amount for cases that settled in the first half of the year was $21 million, representing a 47% decrease compared to the full-year 2022 inflation-adjusted average settlement of $39 million. The median settlement value for cases settled in the year’s first half was $16 million, which represents a $3 million increase over the full-year 2022 inflation-adjusted median of $13 million.

The shift in the average and median settlement amounts is reflects in part a decrease in the percentage of settlements between $10 million and $19.9 million, a “substantial increase” in the percentage of settlements between $20 million and $49.9 million, and a decrease in the percentage of settlements greater than $50 million.