The number of securities class action lawsuit filings involving accounting allegations increased in 2023 compared to 2022, but the 2023 accounting-related filings remained below the long-term annual average number of such filings, according to the latest annual report from Cornerstone Research. The number of accounting-related settlements decreased during 2023, as did the median settlement value, though the aggregate and average value of accounting related settlements increased. The Cornerstone Research Report, which is entitled “Accounting Class Action Filings and Settlements: 2023 Review and Analysis,” can be found here. Cornerstone Research’s April 3, 2024, press release about the report can be found here.Continue Reading Cornerstone Research: Accounting-Related Securities Suit Filings Increased in 2023

The number of securities class action lawsuits filed against life sciences companies in 2023 remained steady compared to 2022, as suits against life sciences companies represented almost one in five of the securities class action lawsuits filed during the year, according to a new report from the Dechert law firm. The report, entitled “Dechert Survey: Developments in Securities Fraud Class Actions Against U.S. Life Sciences Companies: 2023 Edition,” states that there were a total of 43 securities suits filed against life sciences companies in 2023, the same number as were filed in 2022. The Dechert law firm’s March 27, 2024 press release, which links to the full report,  can be found here.Continue Reading Life Sciences Companies Remained Frequent Securities Suit Targets in 2023

Last week, when I wrote about two recent AI-related SEC enforcement actions, I noted that the SEC’s public statements when it announced the enforcement action settlements not only underscored the SEC’s AI-related concerns but also illustrated the kinds of issues that could lead to private securities litigation brought by investors who claim they were misled by companies’ AI-related disclosures. In the latest example showing how company disclosures relating to artificial intelligence can lead to securities litigation, a plaintiff shareholder has filed a securities suit against a security screening company alleging that the company’s public statements about its AI-enabled products and services were misleading. A copy of the March 25, 2024, complaint can be found here.Continue Reading Security Screening Company Hit with AI-Related Securities Suit

SPACs were back in the business headlines again last Friday, as the news circulated that shareholders of Digital World Acquisition Corp., a special purpose acquisition company, had approved the proposed business combination with Trump Media & Technology Group, the corporate parent of Truth Social, Donald Trump’s social media company. On the same day, in a reminder of what has happened to all too many companies that merged with SPACs during the peak of the SPAC frenzy in 2020 and 2021, shareholders of a SPAC that merged with an electric vehicle company sued the directors and officers of the SPAC as well as the EV company, alleging that in the merger proxy statement the defendants failed to disclose multiple business problems at the target company. The lawsuit is the latest SPAC-related securities suit to be filed after the collapse of the SPAC surge.Continue Reading EV Company Hit With SPAC-Related Securities Suit

We have all seen the various league tables showing which plaintiffs’ firms have had the highest average securities class action settlements. But do these firms wind up at the top of the tables because they produce better outcomes for the plaintiff class, or do they produce these results simply because they are better at winning the race to become lead counsel in the better cases? As three academics put it in their recent paper, “do the plaintiffs’ lawyers matter”?

In their paper, New York Law Professor Stephen J. Choi, University of Richmond Law Professor Jessica M. Erickson, and University of Michigan Law Professor Adam C. Pritchard survey securities class action lawsuit settlements in order to determine whether the “top tier” plaintiffs’ firms actually produce better outcomes for the plaintiff class. Interestingly, the authors conclude that while the top firms produce better outcomes in a narrow subset of cases, in most other cases they do not. The authors suggest these observations have important implications for both claimants and courts. The authors’ paper can be found here. The authors’ March 12, 2024, column in the CLS Blue Sky Blog about their paper can be found here.  Continue Reading Does the Plaintiff Law Firm Matter in Securities Suit Outcomes?

As readers know, in recent years I have been tracking two securities class action litigation filing trends:  the filing of SPAC-related lawsuits, and the filing of COVID-related lawsuits. In a noteworthy development, a securities suit filed last week embodies both of these filing trends. That is, a company that was formed through a SPAC merger has been hit with a securities suit based on COVID-related allegations. As discussed below, the new lawsuit has several interesting features. A copy of the February 28, 2024, complaint can be found here.Continue Reading Two-Fer: SPAC-Merged Company Hit With COVID-Related Securities Suit        

In any discussion these days of emerging directors’ and officers’ risks, the conversation inevitably turns to the topic of Artificial Intelligence (AI). There is a general perception that while AI presents significant opportunities, it also involves significant liability risks. The contours of the risk that AI represents have yet to develop, largely because the claims have yet to emerge. That is, until now.

Earlier this week, a plaintiff shareholder filed a securities class action lawsuit against the AI-enabled software platform company, Innodata. The plaintiff claims the company misrepresented the extent to which the company’s products and services actually employ AI technology and also the extent of the company’s investment in AI. As discussed further below, as far as I know, this case represents the first AI-related securities class action lawsuit to be filed. A copy of the plaintiff’s February 21, 2024, complaint can be found here.Continue Reading First AI-Related Securities Suit Filed

In what is apparently the largest privacy and cybersecurity-related securities class action lawsuit settlement ever, the parties to the Alphabet Google+ user data securities suit have agreed to settle the action for $350 million. As discussed below, this massive settlement, which is subject to court approval, is significant for a number of important reasons. A copy of the parties’ February 5, 2024, Stipulation of Settlement can be found here. The plaintiffs’ February 5, 2024, motion for preliminary settlement approval can be found here.Continue Reading Alphabet Google+ User Data Privacy-Related Securities Suit Settles for $350 Million

Three of the five largest bank failures in U.S. history took place over the course of just a few weeks last Spring. Because U.S. government officials acted forcefully at the time, this dangerous sequence did not trigger a contagion event across the banking sector generally. But while the Fed and others managed to stave off further bank failures, underlying problems persisted at certain banks – in particular, problems relating to the commercial real estate sector continued to weigh on banking institutions. As the Wall Street Journal put it in an article late last week, “Investors have wondered when the pain from the downturn in commercial property would hit banks.” As the Journal noted in the same article, the commercial property-related pain has now arrived for some banks. Several banks, including New York Community Bancorp (NYCB), suffered significant stock price drops after the banks last week announced steep increases in their loss reserves in their commercial real estate portfolios.

And now these developments have translated into securities litigation, as a plaintiff shareholder has launched a securities class action lawsuit against NYCB and certain of its executives. These developments and the filing of the lawsuit suggest while the Banking Crisis of 2023 may have been contained, continuing problems in the banking sector could be a factor in the number of securities class action lawsuit filings during the year. A copy of the February 6, 2024 complaint filed against NYCB can be found here.Continue Reading Commercial Real Estate Woes Weigh on Bank, Lead to New Securities Suit

Sarah Eichenberger
Jonathan Rotenberg

As I noted in a post at the time, last Fall, the U.S. Supreme Court in the Macquarie Infrastructure Corporation v. Moab Partners, L.P. case agreed to take up the question of whether whether the failure to make disclosure required by Item 303 of Reg. S-K is an actionable omission under Section 10(b) and Rule 10b-5. In January, the Court heard oral argument in the case. In the following guest post, Sarah Eichenberger and Jonathan Rotenberg, Partners in the Securities Litigation practice at the Katten law firm, discuss the questions the Justices as asked the oral argument and assess the possible outcomes of the case, as well as the potential significance of the outcomes. I would like to thank Sarah and Jonathan for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah and Jonathan’s article.Continue Reading Guest Post: Supreme Court Considers Whether Pure Omissions Can Support Section 10(b) Liability