The number of federal court securities class action lawsuit filings increased in 2024 for the second year in a row, to the highest level since 2020. The increased number of federal court securities suit filings during the past year is due to several factors, including continuing filings relating to ongoing trends such as new lawsuit filings relating to SPACs, COVID-related suits, and cryptocurrencies, as discussed further below.
D&O insurers closely track the annual number of securities class action lawsuit filings. The number of annual filings can provide some indication of the insurers’ ultimate loss costs for the year. The current year’s filing patterns can also inform the insurers’ efforts to try to determine the profit-making price for their insurance product.
According to my tally, there were 222 federal court securities class action lawsuit filings in 2024, compared to 212 in 2023, representing about a 4.7 % increase. The 222 federal court securities suit filings represent the highest annual number of federal court filings since 2020, when, due to significant number of federal court class action merger objection lawsuit filings that year, there were 313 federal court securities class action lawsuit filings. Please note that these numbers reflect only federal court securities suit filings; the numbers do not include state court securities class action lawsuit filings.
The 2024 federal court securities suit filings total reflect a number of continuing securities lawsuit filing trends. For example, of the 222 federal court securities suit filings, nine involved SPAC-related lawsuits, representing 4% of all 2024 filings. Similarly, there were 16 COVID-related securities lawsuit filings, representing 7.2% of 2024 filings. There were also seven cryptocurrency-related federal court securities lawsuit filings in 2024, representing 3.2% of all filings. In addition to the impact of these continuing trends, the number of 2024 securities suit filings was also increased by filings related to artificial intelligence; of the 222 federal court securities suit filings in 2024, 13 were AI-related, representing 5.8% of all 2024 federal court securities class action lawsuit filings. The theme-related filings from these four categories collectively total 45, representing 20.2% of all 2024 federal court securities class action lawsuit filings.
In addition, there were five federal court class action merger objection lawsuit filings in 2024, meaning that there were 217 “core” or “traditional” lawsuit filings during the year. The number of federal class action merger objection lawsuit filings has declined significantly since the 2016-2020 timeframe, resulting in significant decrease in the overall annual number of federal court securities suit filings since that time. It is important to note that significant numbers of federal court merger objection lawsuits continue to be filed; however, in more recent years, plaintiffs’ lawyers, for tactical reason, have chosen to file these actions as individual lawsuits rather than as class actions, and as a result these filings do not show up in the class action filing numbers.
The 2024 federal court securities class action lawsuit filings were first-filed in 40 different federal district courts. The federal district court with the highest number of first-filed securities suit complaints in 2024 was the Southern District of New York, which had 50 class action securities suit filings. The district courts with the next highest number of first-filed securities suit complaints were the Northern District of California with 38, and the Central District of California, with 23.
Of the 222 federal court securities class action lawsuits filed in 2024, a total of 66 were filed in district courts in New York, representing about 29.8% of all 2024 federal court securities suit filings, and 64 were filed in district courts in California, representing about 29% of all 2024 federal court securities suit filings. Of the 222 federal court securities lawsuit filings, a total of 130 were first-filed in either California or New York federal district courts, representing about 59% of all 2024 federal court securities class action lawsuit filings.
The 2024 federal court securities class action lawsuit were filed against a wide variety of different kinds of companies. The 222 federal court securities class action lawsuits were filed against companies in 100 different Standard Industrial Classification (SIC) codes. The SIC Code with the highest number of 2024 filings was the SIC Code Category 7372 (Prepackaged Software), which had 24 federal court securities class action lawsuit filings in 2024, representing about 10.8% of all 2024 federal court securities suits.
The SIC Code Industry Group with the highest number of 2024 securities suit filings was the 283 SIC Code Industry Group (Drugs), which had 37 securities suit filings during the year, including 22 in the 2834 SIC Code category (Pharmaceutical Preparations). In addition to the 2024 filings in the 283 Industry Group, there were an additional ten securities suits filed in the 384 SIC Code Industry Group (Surgical and Medical Instruments). Together, lawsuits against companies in these two industry groups totalled 47 federal court securities suit filings in 2024, meaning that 21.1% of the total number of 2024 suits were filed against biotechnology and medical device companies.
Companies in the SIC Code group 737 SIC Code Industry Group (Computer Programming and Data Processing) collectively had 36 securities lawsuit filings in 2024, meaning that lawsuits filed against companies in the high technology industry represented 16.2% of all 2024 federal court securities class action lawsuit filings.
A total of 83 securities lawsuits were filed in 2024 against companies in the biotechnology and high-tech industry groups taken collectively, meaning that during 2024, lawsuits against companies in these two industry groups represented 37.3% of all federal court securities class action lawsuit filings.
Of the 222 federal court securities class action lawsuit filings in 2024, 37 were filed against companies either organized under the laws of a country outside the United States or that have their principal place of business outside the U.S. The companies named in these suits represented 16 different countries. The countries with the highest number of 2024 securities suit filings were the United Kingdom, with 7; and Israel and China, with five each.
Nine of the 222 federal court securities suit filings in 2024 involved IPO companies, representing 4% of all 2024 filings. Of these nine lawsuits, one represented the IPO class of 2020; three represented the IPO class of 2021; two represented the IPO class of 2023; and three represented the IPO class of 2024.
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 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.
Top Ten Stories of 2024 Webinar: Please note that on Wednesday, January 15, 2024, at 11:00 AM EST, my colleagues Marissa Streckfus, Chris Bertola, and I will be conducting a free, hour-long webinar in which we will discuss The Top Ten D&O Stories of 2024. Registration for the webinar can be found here. I hope you can join us for the webinar. In addition, keep your eyes out for my annual Top Ten blog post, which I will be publishing tomorrow.