According to the latest report from Cornerstone Research, the number of federal and state securities class action lawsuits filed increased in 2024 for the second year in a row, to the highest level since 2020, even though the overall number of liability actions filings under the ’33 Act declined to the lowest level in the last ten years. As discussed below, a more detailed analysis of the 2024 securities class action lawsuit filing figures suggests that the 2024 filing activity was elevated compared to both recent and longer-term historical levels. The January 29, 2025, report, which was written in conjunction with the Stanford Law School Securities Class Action Clearinghouse, and which is entitled “Securities Class Action Filings: 2024 Year in Review,” can be found here. Cornerstone Research’s January 29, 2025 press release about the report can be found here.

According to the report, there were a total of 225 securities class action lawsuits filed in federal and state courts during 2024, representing about a 4.8% increase over the 215 filed in 2023, and the highest annual total number of securities suit filings since 2020. Though the total number of filings increased in 2024 for the second year in a row, the 2024 total was actually slightly below the 1997-2023 annual average number of filings of 227. (The annual number of filings during the period 2016-2020 was significantly inflated by the influx during that period of federal court merger objection class action lawsuit filings; these suits are still being filed, but as individual actions rather than as class actions, and so they do not show up in the class action statistics.) [Please also see my final note below on the counting methodology used in the Cornerstone Research report.]

One way to view the longer-term historical securities class action lawsuit figures is to consider only “core” filings – that is, the traditional lawsuit filings without regard to the arguably distorting effect of the merger objection lawsuit filings. There were 220 “core” securities class action lawsuit filings in 2024, compared to 209 in 2023, well above the 1997-2023 annual average number of “core” filings of 193. In other words, when only core filings are considered, the number of securities class action lawsuits filed in 2024 are shown to have been elevated compared both to recent and longer-term historical trends.

While the total number of filings in 2024 was up relative to more recent years, the number of ’33 Act suits filed in federal and state court in 2024 was actually down relative to both historical and more recent levels. There was a total of 21 ’33 Act filings in 2024, down from 32 in 2023, and representing the lowest annual number of ’33 Act filings during the period 2015-2024. The number of state court only ’33 Act filings was also at historically low levels in 2024; there were only three state court only ’33 Act filings in 2024, the lowest annual number during the period 2015-2024. One likely explanation for this low level of ’33 Act filing activity in 2024 is the very low level of IPO activity during the period 2022-2024, especially relative to the immediately preceding years.

One significant factor contributing to the overall increase in the number of securities class action lawsuit filings in 2024, notwithstanding the decrease in ’33 Act filings during the year, was the significant number of “theme”-related filings. Thus, for instance, the number of AI-related filings increased to 15 in 2024, compared to only seven in 2023. In addition, there increases in 2024 in the number of COVID-19-related filings (from 11 in 2023 to 15 in 2024), though the number of SPAC-related filings in 2024 decreased in 2024 relative to 2023 (from 27 in 2023 to 11 in 2024). Overall, these three trend categories (that is, AI, COVID-19, and SPACs) accounted for nearly 20% of all 2024 securities lawsuit filings.

There were 34 securities class action lawsuit filings against non-U.S. U.S.-listed companies in 2024 (representing about 16% of all filings), up from 32 in 2023, but well below the 2015-2023 annual average number of filings against non-U.S. companies of 45 (representing an annual average of 22% of all filings during that period).

One new additional statistical category considered in this year’s report is an analysis of the number of securities lawsuit filings reference short seller reports. The Cornerstone Research report shows that during 2024, 21 securities lawsuit complaints reference short seller reports, representing about 10% of all core filings during 2024. Of the 21 lawsuits referencing short seller reports, 16 (76%) were filed by just four law firms, The Rosen Law Firm, Pomerantz, Glancy Prongay & Murray, and Levi & Korinsky.

While the absolute number of securities class action lawsuits filed is always a statistic of keen interest to D&O insurance professionals, arguably the more important statistic is the litigation rate – that is, the number of annual securities class action lawsuit filings relative to the number of U.S.-listed companies. The litigation rate statistic shows the likelihood in a given year of any given company getting hit with a securities class action lawsuit. In that regard, it is worth noting that the litigation rate in 2024 was 4.0%, up from 3.3% and at the the highest level since 2021 (4.2%).

The long-term historical annual average litigation rates are substantially distorted by the high levels of merger objection litigation filing activity during the period 2016-2020; a “core” ligation rate, which excludes the merger objection lawsuits, is a more meaningful statistic. The core litigation rate in 2024 was 3.9%, well above the 3.2% core litigation rate in 2023, and also above the 2010-2023 average annual core litigation rate of 3.6%, both of which comparisons suggest that the level of securities litigation activity in 2024 was elevated both compared to recent periods and to long-term historical averages.

Another interesting statistical comparison is to consider the litigation rate of companies in the S&P 500. In 2024, the securities litigation rate for S&P 500 companies was 6.1%, below the 7.1% litigation rate in 2023, but above the 2001-2023 annual average S&P 500 litigation rate of 5.3%.

It is one thing to file a lawsuit – how do all of these lawsuit filings fare? The report shows that during the period 1997 to 2024, “46% of core federal lawsuits were settled, 43% were dismissed, 0.5% were remanded, 10% are continuing.” During this time, only 21 lawsuits, or 0.4% of all federal core lawsuit filings, went to trial.   

The report reflects two difference measures of investor losses represented in the securities class action lawsuits during the year. 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 Disclosure Dollar Loss Index rose 23%, to $438 billion in 2024, far above the historical annual average of $237 billion. Conversely, the aggregate filing size, as measured by the Maximum Dollar Loss Index, declined sharply to $1.6 trillion in 2024, a 52% drop from $3.3 trillion in 2023. 

It is important to note when considering the filing statistical numbers in the Cornerstone Research report to consider the methodology used in the report. The Cornerstone Research report tally differs in two important ways from other published reports on securities filing statistics. First, the report counts each lawsuit filed against a company on a given set of allegations only once, regardless of the number of actual complaints filed and regardless of where multiple complaints are filed. Second, the Cornerstone Research report considers both federal and state securities class action lawsuit filings, while other published reports consider only federal court securities class action lawsuit filings.