Largely due to the decline in the numbers of merger objection class action lawsuit filings and a decline in the number of Rule 10b-5 filings, the number of new federal court securities class action lawsuit filings declined in 2022 for the fourth consecutive year, according to the latest annual report from NERA Economic Consulting. The report, entitled “Recent Trends in Securities Class Action Litigation: 2022 Full-Year Review” also shows that aggregate, average, and median securities class action lawsuit settlements increased in 2022 relative to 2021. NERA’s January 24, 2023, press release about the report, with a link to the full report, can be found here.Continue Reading NERA: Securities Suit Filings Declined in 2022 for the Fourth Consecutive Year
As 2022 came to an end, many SPAC sponsors and executives, concerned about the possible onset on January 1, 2023, of an excise tax on amounts to be returned to investors, moved to liquidate their SPACs. As discussed further below, concerns about the possible applicability of the tax have now been alleviated, but given the general marketplace conditions for SPAC merger transactions, it seems likely that there will be further SPAC liquidations ahead in the new year. The possibility of a SPAC liquidation raises a number of considerations, including also important considerations with respect to D&O insurance.
Businesses these days face a wide variety of headwinds – rising interest rates, economic inflation, supply chain and labor supply disruptions, war in Ukraine, even continued disruptions from COVID – that are interfering with business operations and affecting financial performance. In some instances, these macroeconomic factors are translating into securities litigation. In the latest example of this phenomenon, a plaintiff shareholder has sued video display systems company Daktronics following the company’s announcement that supply chain disruptions, labor shortages, and shutdowns in China caused a decline in the company’s sales, which led to a later announcement of a “substantial doubt” of the company’s ability to continue as a going concern. The December 21, 2022, complaint can be found 
In a few days, when I work up my summary of the year’s events in the world of D&O, one of the stories I will be covering will be the volume of SPAC-related securities litigation during the year. The SPAC-related litigation represents a significant part of the year’s securities class action lawsuit filings. The latest example of this phenomenon is the lawsuit filed late last week against residential home improvement financing platform Sunlight Financial Holdings, Inc., which became a public company through a July 2021 merger with a SPAC. The new lawsuit is in many ways representative of the kinds of SPAC-related lawsuits filed this year. A copy of the complaint in the new lawsuit can be found 
Since the initial coronavirus outbreak in the U.S. in March 2020, plaintiffs’ lawyers have filed a host of securities class action lawsuits against companies raising a variety of COVID-19-related allegations. Many of these cases have faced significant hurdles at the initial pleading stage, and in a number of cases the dismissal motions have been granted. The one categorical exception to these dismissal motion generalizations seems to be cases involving vaccine development companies. Two rulings in the past week seem to corroborate both of these observations. First, in a December 9, 2022 ruling in the securities suit pending against the diagnostic testing company Talis Biomedical, the court granted the defendants’ motion to dismiss (albeit with leave to amend). However, in a December 12, 2022 ruling in the securities case against the vaccine development company Novavax, the court denied the defendants’ dismissal motion in significant part. The rulings in these two cases are discussed below.