As I have noted on this site as the cases have accumulated (most recently here), since March 2020 plaintiffs’ lawyers’ have filed over two dozen coronavirus-related securities class action lawsuits. But even as the plaintiffs’ lawyers appeared eager to pursue these types of claims, the question has remained about how these lawsuits will fare. Now, in first dismissal motion ruling in a coronavirus-related securities suit, the court has granted the defendants’ motion to dismiss, in the coronavirus-related securities suit filed last July against Velocity Financial. A copy of Central District of California Judge Gary Klausner’s January 25, 2021 order can be found here.
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NERA: 2020 Securities Suit Filings Down vs. 2019, But Above Long-Term Levels
Federal court securities class action lawsuit filings declined 22% in 2020 compared to 2019, but the 2020 filings were still above the long-term historical average annual numbers of filings, according to NERA Economic Consulting’s annual securities litigation report. The 2020 securities suit filing drop-off reflected a decline in the number of federal court merger objection class action lawsuits filed during the year, offset in part by the number of coronavirus-related securities suits. NERA’s January 25, 2021 report can be found here.
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Chinese Securities Law Revision Introduces “Western-Style Securities Class Actions”
One of the more interesting developments in recent years has been the global rise of collective procedural mechanisms for aggrieved investors to seek redress from corporate parties for disclosure misrepresentations or omissions. In that vein, the recent revision of the securities laws of the People’s Republic of China are particularly interesting.
As discussed in a recent memo from AIG, presented in conjunction with the Shanghai-based JunHe law firm, the revised Chinese securities laws include among many other changes new provisions allowing for collective investor actions. According to the AIG memo, entitled “Securities Class Actions under the New Securities Law in China” (here), the revised law introduces “western-style class actions to China.”
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ICYMI, The “Top Ten Stories in D&O In 2020” Webinar Recording Now Available
In case you missed last week’s “Top Ten Stories in D&O of 2020” webinar that I participated in with my colleague Marissa Streckfus, the recording is now available. You can watch the full hour-long presentation here.
Walmart Hit with Opioid-Related Securities Class Action Lawsuit
The opioid crisis is not anything new; it has been around for years. Indeed, more than three years ago I posted an item noting the outbreak at the time of a rash of opioid-related securities class action lawsuits. But while the opioid crisis has been around for years, plaintiff shareholders continue to file opioid-related securities suits. On January 20, 2021, a plaintiff shareholder filed a securities class action lawsuit against Walmart in the District of Delaware based on the U.S. Department of Justice’s December 2020 lawsuit against the company alleging a role in the opioid epidemic. A copy of the securities class action lawsuit complaint can be found here.
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Chinese Social Media Company Hit with Coronavirus-Related Securities Suit
In the latest sign that coronavirus-related securities class action lawsuit filings will continue into the New Year, on January 20, 2021, a plaintiff shareholder filed a COVID-19-related securities suit against the Chinese Internet social media company Lizhi, Inc. The lawsuit relates to the coronavirus outbreak now more than a year ago in China, and to the company’s January 2020 U.S. IPO. A copy of the plaintiff’s complaint can be found here.
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A “New Era” of Caremark Claims?
One of the more noteworthy recent developments in corporate and securities litigation has been the resurgence of Delaware law “duty of oversight” claims, as I noted in my recent annual round-up of D&O liability issues. Delaware courts have sustained several of these kinds of “Caremark duty” claims, which until recently were distinctly disfavored – which raises the questions of why these claims are now proving viable, and whether the renewed risk of duty of oversight claims is here to stay? In a December 2020 paper entitled “A New Caremark Era: Causes and Consequences” (here), Professor Roy Shapira of IDC Herzliya Radzyner Law School identifies what he believes to be the causes of the recent revival of duty of oversights, and presents his view that the changes are here to stay. Professor Shapira’s views are summarized in a January 18, 2021 post (here) on the Harvard Law School Forum on Corporate Governance.
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Aggregate Securities Class Action Settlements Grew Substantially in 2020
Driven largely by several mega-settlements (that is, settlements of $100 million or greater), the aggregate value of global securities class action settlements in 2020 totaled 61% more than in 2019, according to a new report. The report, entitled “2020 Securities Related Settlements Exceed $5.8 Billion,” and published in a January 18, 2021 post on the Harvard Law School Forum on Corporate Governance, was written by Jeff Lubitz of ISS Securities Class Action Services. The report can be found here.
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Diagnostic Testing Company Hit with First Coronavirus-Related Securities Suit of 2021
In what is the first coronavirus-related securities class action lawsuit filed in 2021, and in what is also as far as I know the first coronavirus-related securities suit filed following the filing of an SEC enforcement action against the same company, a plaintiff shareholder has filed an action against diagnostic testing company Decision Diagnostics Corp., relating to the company’s claims during the period March to June 2020 that it had developed a finger-prick test that could detect COVID-19 in less than one minute. A copy of the plaintiff’s complaint can be found here.
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Guest Post: The Ripple Effect – Are Cryptocurrency Tokens Securities, and Why Does it Matter?
As many readers may have noted at the time, in December the SEC filed an enforcement action against Ripple Labs and two of its executives in connection with what the SEC described as the company’s unregistered offering of securities, relating to the company’s sale of digital asset units between 2013 and the time of the filing of the enforcement complaint. In the following guest post, Suresh Ellawala takes a closer look at the issues that the SEC’s enforcement action presents. Suresh is Head of Commercial Financial Lines at Price Forbes & Partners. I would like to thank Suresh 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 Suresh’s article.
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