As I have previously noted, 2018 was another extraordinary year for U.S. securities class action litigation, as filings overall remained at near-historical rates. One of the significant contribution factors to this development was the substantial number of securities suits filed against life sciences companies. The number and significance of the securities suits filed against life sciences companies is detailed in a February  6, 2019 report from the Dechert law firm entitled “Dechert Survey: Developments in U.S. Securities Fraud Class Actions Against Life Sciences Companies: 2018 Edition” (here).
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The heightened pace of securities class action lawsuit filings continued in 2018, as filing levels remained well above historical patterns, even though the total number of suits dipped very slightly compared to 2017. The total number of filings during 2018 was significantly inflated by the number of federal court merger objection lawsuit filings during the year. However, even disregarding the M&A-related lawsuits, the number of traditional lawsuit filings during 2018 was well above long-term averages. Even more significantly, the litigation rate (that is, the number of suits relative to the number of listed companies) arguably was at all-time record high levels in 2018 compared to prior years, as discussed further below.
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Securities class action lawsuits were filed at “near record levels” in the first six months of 2018, according to a July 25, 2018 report from Cornerstone Research. According to the report, which is entitled “Securities Class Action Filings – 2018 Midyear Assessment,” more than 750 federal securities class actions have been filed since mid-2016, the highest number of filings in a 24-month period since the passage of the PSLRA. The report can be found here. Cornerstone Research’s July 25, 2018 press release can be found here. My report of the securities suit filings in the year’s first six months can be found here.
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In general, securities litigation filing trends emerge gradually and across long stretches of time. These kinds of long term trends have been the subject of a number of recent reports discussed on this site – including, for example, recent reports from NERA Economic Consulting (about which refer here), Cornerstone Research (here), as well as my own report. Though trends often become apparent only over the course of months and years, sometimes they are apparent in much shorter time frames. As it happens, the securities suit filings on a single day last week managed to neatly encapsulate all of the important current securities litigation filing trends.
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Securities class action lawsuits were filed at a record pace in the first half of 2017, according to the latest report from Cornerstone Research. While the surge in securities suit filings is due in part to the rise of federal court merger objection lawsuit filings, both traditional securities suit filings and M&A filings were “at historic levels.” The Report, jointly prepared by Cornerstone Research in conjunction with the Stanford Securities Class Action Clearinghouse and entitled “Securities Class Action Filings – 2017 Mid-Year Assessment,” can be found here. Cornerstone Research’s July 25, 2017 press release about the report can be found here. My own analysis of the first half securities suit filings can be found here.
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life sciencesIn 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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wooden-judges-gavelLargely driven by a surge in the number of federal court merger objection class action lawsuits, the number of securities class action lawsuit filings during 2016 reached record high levels. The number of filings in 2016 accelerated as the year increased, with a significantly greater number of filings in the year’s second half, compared to the number of filings in the year’s first half.
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stormIn an interesting post on his D&O Discourse blog earlier this fall (here), Doug Greene of the Lane Powell law firm raised the question whether there is a securities litigation storm brewing. Citing a number of different factors ranging from the SEC whistleblower program to changes in the plaintiffs’ bar, Greene suggested that we could be headed toward a significantly increased number of securities class action lawsuits. I agree with most of what Greene said, except for one thing. The securities litigation storm isn’t on the horizon – it is already here.
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brazilAs a result of scandals, investigations, and even an environmental catastrophe, there has been a wave of securities lawsuit filings in the U.S. against Brazilian-domiciled companies whose securities are listed in the U.S. This filing trend began in late 2014 with the first lawsuit filing against Petrobras and certain of its directors and officers, which was in turn followed by lawsuits against other companies caught up in the corruption scandal. In recent weeks lawsuits related to a separate regulatory investigation in Brazil have emerged, bringing the total number of securities lawsuits pending in the U.S. against Brazilian companies to six. These developments, along with events in Brazil itself, have roiled the D&O insurance marketplace in Brazil, particularly for Brazilian companies with securities listed in the U.S.
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As part of our beat here at The D&O Diaryfilings2016, we regularly monitor new lawsuit filings and try to identify trends and patterns. Over the years, we have noted and commented on this blog about many of the trends and patterns we have identified. More than once we have noted the incidence of director and officer liability litigation arising out of environmental issues. We have also noted that D&O litigation often follows after the announcement of FCPA investigations. As discussed below, there has been a flurry of recent filings involving environmental issues. I have also noted below an interesting variant on the FCPA follow-on civil lawsuit pattern.
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