The number of securities class action lawsuits filed in the first six months of 2024 increased relative to the number of securities suits filed in the second half of 2023, according to a new report from Cornerstone Research. The number of suits filed in the first half of 2024 is roughly level with the historical semiannual average number of filings. The July 31, 2024, report, which is entitled “Securities Class Action Filings:2024 Midyear Assessment,” can be found here. Cornerstone Research’s July 31, 2024, press release regarding the report can be found here.

According to the report, there were a total of 112 securities class action lawsuits filed in state and federal courts during the first six months of 2024. Three of the 112 twelve suits were standalone state court securities class action suits (“standalone” meaning without a parallel federal court suit); the remaining 109 securities suits were federal court filings. The number of first-half securities suit filings (112) annualizes to a year-end total of 224, which is higher than the 216 total in 2023, and would in fact represent the highest annual total since 2000.

The number of first-half securities suits filings (112) is roughly level with the 1996-2023 historical semiannual average of 113 filings and higher than the 103 securities suits filed in the second half of 2023. There were only two securities class action merger objection lawsuits filed in the first six months of 2024, meaning there were 110 “core” securities class action lawsuits in the year’s first half. The 110 core securities suit filings in the first six months of 2024 were higher than the 1997-2023 semiannual average of core filings of 96.

According to the report, one factor contributing to the number of securities class action lawsuit filings in the first six months was the number of artificial intelligence (AI) related securities suits. In an interesting feature in this report, Cornerstone Research tallied all of the AI-related securities class action lawsuits filed, going back to the first in 2020. According to the report, there have been a total of 31 AI-related securities suits filed during the period 2020 to the end of the first half of 2024, with six of them filed in the first half of 2024. The report notes a number of other filing trends; in particular, the report notes that the number of COVID-19-related securities suits in the first half of 2024 (7) means that the suits are on track to exceed the number of COVID-relates suits filed in 2023 (11).

The report notes that at the current pace, 4% of the companies listed on major U.S. exchanges are or will become subject to a securities class action lawsuit in 2024, which would represent an increase compared to 2023 (when the percentage was 3.3%). The 4% projected litigation rate would be below the 2010-2023 annual average percentage of 5%, but that average is someone distorted by the flood of federal court merger objection lawsuit filings during the period 2016-2020.

There were 13 core federal filings against non-U.S. companies in the first half of 2024, suggesting an annualized year-end total of 26 filings against non-U.S. companies, which would be the lowest number in at least ten years, and well below both the recent high number of filings against non-U.S. companies of 73 filings in 2020, and below the 32 filings in 2023.

The report reflects two different measures of investor losses represented in the securities class action lawsuits filed in the year’s first six months. The first of these is Disclosure Dollar Loss (DDL), which measure the dollar value change in the defendant company’s share price between the trading day immediately prior to the end of the class period and the trading day immediately after the last day of the class period. The second of these is Maximum Dollar Loss (MDL) which measure the difference in the defendant company’s share price between the trading day during the class period with the highest market capitalization and the share price on the day following the end of the class period.

The MDL that the first half filings represent declined to $908 billion, compared to the second half 2023 MDL of $1,002 billion, but remained above the 1997-2023 semiannual average of $600 billion.

The DDL reflected in the first half filings increased to $185 billion, compared to $171 billion in second half of 2022, which is well above the 1997-2023 semiannual average DDL of $119 billion but well below the record high of $518 billion in the first half of 2022.