As I noted in my survey of 2016 securities class action litigation (here), one of the factors contributing to the rise in securities litigation last year was the volume of litigation filed against companies in the life sciences sector. According to an analysis of life sciences-related securities suits by the Dechert law firm, the annual number of securities suits filed against companies in the sector rose by over 70% between 2014 and 2016. The law firm’s February 17, 2017 report, entitled “Developments in Securities Fraud Class Actions Against U.S. Life Sciences Companies,” can be found here.
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Book Review: Federal Securities Litigation
The interpretation and application of the federal securities laws has in recent years proven to be a rapidly changing arena. For that reason, it is a particularly welcome development that the authors of the “Federal Securities Litigation: A Deskbook for the Practitioner” have released the latest update of their single-volume resource on litigation under the U.S. federal securities laws. The authors – Daniel Kramer and Audra Soloway of the Paul Weiss law firm, Jeff Hammel and David Brodsky of the Latham & Watkins law firm – have produced a fully updated version of the book, with changes reflecting important recent developments in the securities case law. The result is an updated volume that is clear, concise, and well-organized. Information about the 2016 update can be found here.
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Ninth Circuit: Ethics Code Violations Insufficient to State Securities Law Claim
In the wake of the era of corporate scandals, Congress enacted the Sarbanes-Oxley Act. Section 406 of the Act required the SEC to promulgate rules requiring reporting companies to disclose whether or not they have adopted a code of ethics for its financial officers. The SEC subsequently issued rules implementing this directive, and as a result companies facing the new disclosure obligations adopted codes of ethics.
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Guest Post: Supreme Court Nominee’s Skeptical View of Securities Litigation, Agency Deference
President Trump’s nomination of Tenth Circuit Justice Neil Gorsuch to fill the Supreme Court seat vacated by the late Justice Antonin Scalia has attracted a great deal of commentary and raised a host of questions about the proposed new Justice’s views on a variety of different subjects. In the following guest post, attorneys from the Paul Weiss law firm take a look at the proposed Justice’s past writings and opinions on securities litigation and agency deference questions. I would like to thank the Paul Weiss attorneys for allowing me to publish their 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 the Paul Weiss attorneys’ guest post.
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Cornerstone Research: Securities Lawsuit Filings Rise to Highest Level in 20 Years
According to the latest annual securities litigation survey, securities class action lawsuit filings were at “record” levels in 2016. A surge of federal court merger objection lawsuit filings during the year accounted for much of the activity, but even so-called “traditional” securities lawsuit filings were at elevated levels, according to report, which was release jointly by Cornerstone Research and the Stanford Law School Class Action Clearinghouse. The January 31, 2017 report, entitled “Securities Class Action Filings: 2016 Year in Review,” can be found here. Cornerstone Research’s and the Stanford Law School Class Action Clearinghouse’s January 31, 2017 press release can be found here.
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Record Setting Securities Suit Filing Pace Accelerates Into New Year
As the various annual securities suit filing reports have been coming out, it has become clear that federal securities class action lawsuit filings were at record levels in 2016, largely as a result of a rise of merger objection lawsuit filings in federal court. Now that 2017 is well underway, it is clear that the heightened pace of securities suit filing has continued, and arguably even accelerated, in the New Year.
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NERA Economic Consulting: Record Number of Securities Suit Filings in 2016
According to NERA Economic Consulting’s latest annual securities litigation report, there were a “record number” of securities class action lawsuit filed in 2016. The January 23, 2017 report, which is entitled “Recent Trends in Securities Class Action Litigation: 2016 Full-Year Review” (here), attributes the growth in filings during the year largely to the number of federal court merger objection lawsuits, which more than doubled from the previous year. NERA’s January 23, 2017 press release about the report can be found here.
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Supreme Court Agrees to Hear Securities Act Statute of Repose Tolling Question
The U.S. Supreme Court has agreed to take up a case arising out of the credit crisis-era collapse of the Lehman Brothers investment bank, in order to decide whether or not, under principles known as the “American Pipe doctrine,” the filing of a securities class action lawsuit tolls the Securities Act’s statute of repose. In its 1974 American Pipe decision, the Court held that the filing of a class action suit tolls the applicable statute of limitations; in this latest case, the Court must resolve a split between the federal circuit courts and decide whether a class action lawsuit filing also tolls the applicable statute of repose. Though the case involves seemingly arcane issue, it could have very important practical implications, particularly with respect with respect to the timing of class members’ decisions whether or not to opt-out of the class. The U.S. Supreme Court’s January 13, 2017 order granting the petition of the plaintiff for a writ of certiorari in California Public Employees’ Retirement System v. ANZ Securitites Inc. can be found here.
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Setting the “Blow Provisions” in Securities Class Action Settlement Agreements
Among the important parts of any securities class action lawsuit settlement agreement are the so-called “blow provisions,” which provide settling defendants with an option to terminate the settlement agreement if a specified threshold of investors elect to opt out of the settlement. Among other key consideration with respect to blow provisions is that the threshold specified must be carefully structured to allow defendants to terminate or renegotiate the class settlement when opt-outs reach an unacceptable level. In a December 8, 2016 research paper entitled “Considerations for Blow Provisions in Securities Class Action Settlements” (here), Cornerstone Research takes a look at the various ways that blow provisions can be structured, and identifies the pitfalls with the various alternatives.
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Early 2017 Securities Suit Filings Show Continued Active Pace, Life Sciences Focus
In the Bard’s timeless words, what’s past is prologue. And in that same vein, many of the last year’s most pronounced securities class action lawsuit filing trends are already showing signs of strong continuity in the early days of the New Year. As shown in my recent annual securities class action lawsuit filings analysis, by year-end, a record number of securities suits had been filed during 2016, with life sciences companies among the most frequent lawsuit targets. We are only just a few days into 2017, but these securities suit filings trends already appear to be continuing in the New Year, as so far this year both the continued strong filing pace and the heightened levels of securities suit activity involving life sciences companies are already appear to be well-established.
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