Federal court securities class action lawsuit filings declined in the first half of 2021 to the lowest semiannual levels in several years. Several factors contributed to this relative decline, most significantly the shift by plaintiffs’ lawyers toward filing federal court merger objection lawsuits as individual actions rather than as class actions. In addition, as discussed further below, other factors contributed to the relative decline. The filing levels in the year’s first six months puts the filing for the full year 2021 on pace for the lowest annual filing levels since 2015, after several intervening years in which filings were at historically high levels.
Continue Reading Federal Court Securities Lawsuit Filings Decline in Year’s First Half

Bruce Vanyo
Jonathan Rotenberg

As I discussed in a recent post (here), the Ninth Circuit recently reversed in part the district court’s dismissal of the Google+ user data-related securities class action lawsuit. One feature of the decision that perhaps did not attract as much attention is the appellate court’s reversal of district court’s dismissal of the plaintiff’s scheme liability claims. In the following guest post, Bruce Vanyo and Jonathan Rotenberg discuss the significance of the scheme liability portion of the Ninth Circuit’s opinion. Bruce and Jonathan are partners in the Securities Litigation practice at Katten Muchin Rosenman LLP, resident in the New York office. I would like to thank Bruce 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: Ninth Circuit Invokes Lorenzo to Revive Scheme Liability Claims

Securities class action litigation activity involving IPO companies recently has been a significant concern, for the companies themselves as well as for their insurers. In the following guest post, Stanford Law School Professor Michael Klausner and Jason Hegland, Stone Kalisa, and Sam Curry of Stanford Securities Litigation Analytics take a look at the data surrounding IPO-related securities litigation. I would like to thank the authors 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: IPO Litigation Risk

John Cheffers

One of the key considerations related securities class action litigation risk is company size as measured by market capitalization. In the following guest post, John Cheffers details this relation between company size and securities class action litigation risk. John is Associate Counsel and Director of Research for Watchdog Research. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
Continue Reading Guest Post: Analyzing Securities Class Actions by Size

On April 12, 2021, when John Coates, the acting director of the SEC Division of Corporate Finance, and Paul Munter, the SEC’s acting chief accountant, issued a statement noting their concerns about the way that SPACs were accounting for warrants issued in connection with SPAC IPOs, they also noted that some entities may need to reclassify the warrants from equity to liabilities, and that the change in accounting treatment might require some entities to restate prior financial statements. As it has turned out, many SPACs have in fact reclassified their warrants and many have in fact restated their financials, as discussed below. In at least one case, discussed in earlier post on this site (here), a SPAC-acquired company that restated its financial based on the warrant accounting issue has been hit with a securities class action lawsuit – which raises the question whether other restatements by other SPACs and de-SPACs will trigger further securities class action litigation.

That is the question asked in a June 22, 2021 Law360 article by Elaine Harwood, Steven McBridge and Laura Simmons of Cornerstone Research entitled “Will SPAC Restatement Wave Trigger Shareholder Litigation?” (here). As discussed below, the authors’ article addresses several interesting and important questions about the warrant accounting issue and the possibility for further litigation.
Continue Reading Will SPAC Warrant Accounting Restatements Result in Further Securities Class Action Litigation?

When the U.S. Supreme Court granted the petition for a writ of certiorari to take up class certification questions raised in the long-running Goldman Sachs securities class action lawsuit, some commentators thought the case might give the Court the opportunity to reconsider fundamental issues about the presumption of reliance under the “fraud on the market” theory in connection with class certification in securities suits. However, as the case has turned out, the Court’s consideration of the case has not produced any fundamental recasting of any key issues; instead, the Court on June 21, 2021 issued a narrow decision that the majority opinion itself acknowledged, with respect to the most significant substantive part of the Court’s opinion, will not be “outcome determinative” in many cases. The Court’s June 21, 2021 decision can be found here.
Continue Reading Supreme Court Vacates Class Certification in Goldman Sachs Securities Suit on Narrow Grounds

In a very interesting June 16, 2021 opinion, the Ninth Circuit has reversed in part the district court’s dismissal of the privacy and cybersecurity-related securities class action lawsuit filed against Google- parent Alphabet, Inc, relating the company’s discovery of and decision not to disclose a software vulnerability that exposed user data of nearly half a million users of the Google+ social media site. The appellate court’s decision, a copy of which can be found here, could represent a significant development in the evolution of cybersecurity and privacy-related securities litigation.
Continue Reading Ninth Circuit in Part Reverses Dismissal of the Google+ User Data Securities Lawsuit

Shortly after Marriott International’s November 2018 announcement that it had uncovered a data breach in the guest registration system of Starwood (which Marriott had acquired two years earlier), the company was hit with a raft of litigation, including both securities class action lawsuits and shareholder derivative lawsuits. In twin June 11, 2021 opinions, the federal district judge presiding over the various Marriott data breach-related lawsuits granted the defendants’ motions to dismiss both the  consolidated securities suits and the consolidated derivative suits. The lengthy and detailed opinions make for interesting reading and underscore the challenge plaintiffs face in trying to turn a cybersecurity incident into a D&O claim. The opinion in the securities suit can be found here and the opinion in the derivative suit can be found here.
Continue Reading Marriott Data Breach-Related Securities and Derivative Suits Both Dismissed

There have been several investment fads and mass enthusiasms this year that have been agitating the financial markets, but amidst the froth the fizziest speculative investments on the scene are non-fungible tokens (NFTs).  This new asset class uses blockchain technology to track tokens that are attached to verify the authenticity of everything from artwork to sports highlights. The boosters of these assets have mined the enthusiasm for collectibles to drive sky-rocketing asset values for NFTs. With this new type of asset attracting so much attention and activity, it arguably should come as no surprise that the backers promoting NFTs have attracted litigation as well.
Continue Reading Non-Fungible Token (NFT) Craze Leads to Securities Class Action Suit

When senior SEC staff issued a statement in April saying that most warrants issued by SPACs should be treated as liabilities rather than as equity, it triggered a huge slowdown in the previously hot SPAC IPO market. It also forced many existing SPACs to review the way they had previously accounted for warrants; in some instances, individual SPAC companies concluded that they needed to restate their prior financial statements. Now, in a development that highlights the risks that these seemingly obscure accounting issues present, a plaintiff shareholder has filed a securities class action lawsuit against  Virgin Galactic Holdings, a post-SPAC-merger company that restated its financials based on the warrant accounting issue. The May 28, 2021 complaint, a copy of which can be found here, alleges that the company had previously improperly accounted for its warrants, and that the prior accounting treatment violated the securities laws.
Continue Reading Virgin Galactic Hit with Securities Suit Over SPAC Warrant Accounting Issue