Throughout 2023, I have noted examples of securities class action lawsuit filings involving companies whose operations or financial results were undercut by adverse macroeconomic conditions. The specific adverse economic conditions involved have included, for example, rising interest rates, heightened economic inflation, and supply chain and labor supply disruptions.

In yet another example of this phenomenon, a plaintiff shareholder has this week sued the software company Expensify in a lawsuit alleging not that a single adverse macroeconomic factor undercut the company’s results, but rather that adverse macroeconomic conditions in general hurt the company’s financial results and caused it to fall short of the growth projections it made in its IPO. As discussed below, the overall macroeconomic conditions that hurt this company and that were such a factor in securities class action litigation frequency overall in 2023 likely will continue as we head into 2024. There also is a D&O practitioner’s pointer below for those willing to read all the way to the end of this post. A copy of the November 2, 2023, complaint filed against the company can be found here.


Expensify is a cloud-based expense management software platform. The company completed an IPO on November 15, 2021.The company went public at a share price of $27 per share. The subsequently filed securities class action complaint alleges that in the company’s offering documents, the company cited its rapid prior growth and identified reasons why it believed its growth would continue.

However, in an August 8, 2023, earnings release, the company announced that for the second quarter 2023 its revenue decreased below the prior year’s quarter and its net loss increased compared to the year prior quarter. In the accompanying earnings call, the company’s COO noted that since the time of its IPO the company has not been in “normal or stable economic conditions,” as a result of which the company was unable to provide long-term guidance. The company’s share price declined over 28% to close at $4.23 per share.

Then on November 7, 2023, the company announced for the third quarter 2023 that its revenue had declined and its net loss had increased compared to the year prior quarter. The company’s share price declined a further 37%, to close at $1.83 per share.

The Lawsuit

On November 29, 2023, a plaintiff shareholder filed a securities class action lawsuit in the District of Oregon against Expensify, its CEO, its CFO, and one of its directors. The complaint purports to be filed on behalf of all investors who purchased Expensify securities pursuant to or traceable to the offering documents prepared in connection with the company’s IPO.

The complaint alleges that the offering documents made false and/or misleading  statements and/or failed to disclose that: “(i) Expensify’s revenue growth was highly susceptible to structural and macroeconomic headwinds; (ii) as a result, the Company overstated the efficacy of its business model and the likelihood that it would meet the long-term growth projections touted in the Offering Documents; (iii) accordingly, the Company’s post-IPO financial position and/or business prospects were overstated; and (iv) as a result, Defendants’ statements about the Company’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.”

The complaint alleges that the defendants violated Sections 11 and 15 of the Securities Act of 1933. The complaint seeks to recover damages on behalf of the class.


As I noted at the outset, the filing of securities class action lawsuits against companies that have experienced adverse business results to do challenging macroeconomic circumstances has been a significant factor in the overall number of securities class action lawsuits filed so far in 2023.

For example, as I noted here, the impact on consumer demand from rising interest rates was a factor in the securities lawsuit filed last week against the portable power systems company Generac.

By the same token, United Natural Foods was sued in March 2023 in a securities suit after disclosing that inflationary pressures had undercut the company’s financial results; Dutch Bros was also sued in a March 2023 after the company announced that inflationary pressures had undercut the company’s margins.

Similarly, National Vision was sued in January 2023 after the company announced that labor supply disruptions were undercutting its business operations; Plug Power was sued in April 2023 after the company announced operational challenges due to “supply chain complexity”; and Baxter International was sued in July 2023 after the company announced that continuing supply chain woes were setting back the company’s operations and financial results.

While each of the prior lawsuits cited above involved adverse developments due to macroeconomic factors, all of the prior cases involved circumstances attributable to a specific, single adverse economic factor, such as interest rates or inflation. By contrast, the adverse circumstances causing the disruption of Expensify’s financial results was not attributed to a single economic factor; rather, it was, as characterized by the lawsuit complaint, attributable to adverse “macroeconomic headwinds” in general.

The contribution of macroeconomic factors to securities class action litigation frequency is worth contemplating as we get ready to head into 2024.

On the one hand, a number of signs, including indications that inflation may have started to decline, have some economists and market observers suggesting that the economy may be on course for a “soft landing.”

On the other hand, the continued heightened level of interest rates is having an adverse impact on consumer spending. The prospect of higher-for-longer interest rates is hurting small businesses, farmers, and households. Indeed, according to a November 29, 2023, Associated Press article (here), many economic observers believe that, though the global economy proved to be surprisingly resilient in 2023, a host of factors — including the strain of wars, continued economic inflation, and continued high interest rates – could cause the global economy to “falter” in 2024.

Under these circumstances, optimists may continue to hope for the proverbial soft landing in 2024, but probably should also continue to expect adverse economic condition to affect companies’ operations and financial results next year, as well. The likelihood is that the phenomenon of macroeconomic conditions contributing to securities class action litigation frequency that was so pronounced in 2023 will continue as we head into 2024.

One final observation for the benefit of D&O practitioners: D&O underwriters and brokers often debate the time frame within which IPO companies may be susceptible to ’33 Act claims. The debate often turns on the question of whether or not there is continued ’33 Act exposure in the second or third year after a company completes its IPO.

In that regard, companies will want to note that this lawsuit came in at the beginning of the third year after this company completed its IPO – just a consideration that D&O practitioners will want to consider as part of the ongoing dialogue about the timeframe of IPO-related exposures.