Technology-based education firm K12, Inc., which hoped to be able to profit from the pandemic-related shift to virtual learning , has been hit with a securities class action lawsuit alleging that the company’s share price declined after school systems using its platform to address their online learning needs allegedly experienced disappointing results. A copy of the shareholder plaintiff’s November 19, 2020 complaint can be found here.
Continue Reading Online Learning Firm Hit with COVID-19-Related Securities Suit

Readers of this blog well know that in recent years there has been unprecedented levels of securities class action litigation activity, and that even in the midst of the current global health crisis plaintiffs’ lawyers have filed what one law firm has characterized as a “wave” of COVID-19-related securities litigation. The heightened pace of securities filings over the last several years has already triggered calls for another round of securities litigation reform. Now, organizations representing business interests have filed a petition with the SEC seeking to have the agency implement a number of reforms to protect businesses from “unjustified COVID-19 lawsuits.”
Continue Reading Petition to SEC Seeks Protection for Companies from Pandemic-Related Securities Suits

Fines and other recoveries in SEC enforcement action hit record levels during the agency’s fiscal year ended September 30, 2020, even as pandemic-related work closures dampened the number of enforcement actions the agency was able to file, according to the SEC Enforcement Division’s annual report released Monday. The SEC scored a record total of $4.6 billion in recoveries, largely as a result of big fines and disgorgements in a few large matters, while the 405 new standalone enforcement actions the agency filed was the lowest number in six years. The Enforcement Division’s annual report can be found here. The agency’s November 2, 2020 press release about the report can be found here.
Continue Reading Despite COVID-19 Disruptions, SEC Recoveries at Record Levels in FY 2020

Since the coronavirus outbreak emerged earlier this year, I have been tracking the COVID-19-related securities class action lawsuits and writing about each of the cases as they have come in. In an October 28, 2020 memo entitled “COVID-19: Lessons from the Second Wave of Securities Fraud Lawsuits” (here), the WilmerHale law firm takes a deeper look at the coronavirus-related securities litigation, with particular focus on the securities suits filed in the May to September 2020 time frame. Along the way, the memo identifies a number of securities lawsuits filed during that period as coronavirus-related that I had not included in my COVID-19 litigation tally. As discussed below, the memo makes several interesting points about the coronavirus-related securities suits. I also discuss below whether or not I agree that the additional cases that the law firm identified in the memo belong on the list of coronavirus-related cases.
Continue Reading Tallying and Analyzing COVID-19-Related Securities Suits

Due to the financial fallout from the COVID-19 pandemic, the number of U.S. bankruptcy filings by companies with over $100 million in assets was 84 percent higher during the first three quarters of 2020 compared to the same period last year, according to a new report from Cornerstone Research. The report, entitled “Trends in Large Corporate Bankruptcy and Financial Distress: 2005-Q3 2020” (here), shows that the increase in the number of bankruptcies was particularly pronounced for “mega bankruptcies” (involving companies with over $1 billion in reported assets). However, the report also suggests that the number of bankruptcy filings by companies with over $100 million in assets may have peaked in July. Cornerstone Research’s October 28, 2020 press release about the report can be found here.
Continue Reading Cornerstone Research: Business Bankruptcies Up Significantly in Year’s First Nine Months

As part of a continuing series of recordings, I have been participating in sessions the Professional Liability Underwriting Society (PLUS) has organized discussing the potential D&O liability and insurance issues arising out of the coronavirus outbreak and the related economic disruption. In each session in the series I have been joined by my good friends

In the latest COVID-19-related securities class action lawsuit filing, the cruise ship company Royal Caribbean Cruises has been hit with a securities suit alleging that the as the viral disease spread earlier this year the company attempted to soft-pedal its statements about the outbreak’s impact on its operations and bookings, as well as about the safety threat that the outbreak represented for ship crews. As discussed further below, the new lawsuit against Royal Caribbean reflects several of the key trends in the coronavirus-related lawsuits. A copy of the new complaint against Royal Caribbean can be found here.
Continue Reading Royal Caribbean Hit with COVID-19-Related Securities Suit

In the latest SEC enforcement action relating to alleged misrepresentations pertaining to the coronavirus outbreak, the agency has filed a securities fraud action against the President and Chief Science Officer of a biotechnology company who allegedly made false statements to investors concerning the status of his company’s COVID-19 test. The enforcement action complaint also contains allegations concerning the individual’s statements about the status of his company’s delinquent SEC reporting. The enforcement action underscores the fact that the SEC intends to enforce the securities laws with respect to company statements falsely suggesting the company is in a position to profit from the coronavirus outbreak. A copy of the SEC’s September 25, 2020 complaint can be found here. The SEC’s September 25, 2020 press release regarding the enforcement action can be found here.
Continue Reading SEC Files COVID-19-Related Enforcement Action Against Biotech Company Exec

In a development that will come as a surprise to no one who has been reading the business news pages over the last few weeks, Eastman Kodak and certain of its executives have been hit with a securities class action lawsuit based on allegations surrounding the disclosure of a $765 loan to the company from a government agency for the company to develop pharmaceutical materials, including ingredients of COVID-19 drugs, as well as on allegations of insider trading relating to the loan disclosures. As discussed below, the lawsuit is the latest in a series of securities class action lawsuits that have been filed related to the coronavirus outbreak. The complaint in the Kodak lawsuit can be found here.
Continue Reading Kodak Hit With Securities Suit Over COVID-19-Related Loan Disclosure and Related Trading