litigation trends

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In my previous blog post, I noted that plaintiffs’ attorneys’ have been and are continuing to file SPAC-related securities class action suits,  and I also noted that the latest filings are targeting SPAC and SPAC merger entities that completed their IPOs in the early stages of the SPAC IPO frenzy in late 2020 and early 2021. As if to underscore this point, yesterday a plaintiff shareholder filed a securities class action lawsuit against a post-SPAC-merger smart home products technology company, based on alleged misrepresentations in the company’s warranty accruals. The new lawsuit represents the latest example of the SPAC-related securities litigation trend. A copy of the complaint in the new lawsuit can be found here.
Continue Reading SPAC-Related Securities Suit Hits Smart Building Products Tech Company

As I have noted in prior posts (most recently here),over the last several months plaintiff shareholders have filed numerous SPAC-related securities class action lawsuits. In an interesting variant of SPAC-related litigation, a claimant has filed a post-merger SPAC-related class action lawsuit in the Delaware Court of Chancery against the former directors of a SPAC and against the SPAC’s sponsor, in which the claimant alleges the defendants breached their fiduciary duties to the pre-merger SPAC shareholders. The lawsuit has a number of interesting features, as discussed below. A copy of the plaintiffs’ August 4, 2021 complaint in the action can be found here.
Continue Reading SPAC-Related Class Action Breach of Fiduciary Duty Lawsuit Filed in Delaware Chancery Court

Over the last few years, I have posted numerous items citing examples were sexual misconduct allegations or a hostile workplace environment have led to D&O claims. Many of these kinds of suits followed in the wake of the #MeToo movement. The fact that these kinds of allegations can lead to D&O claims is well understood in the D&O insurance industry. However, I know from recent conversations that some in the industry believe that the risk of these kinds of D&O claims has diminished as the #MeToo movement has evolved. However, recent events at the gaming company Activision Blizzard shows that unfortunately the kinds of underlying allegations that have led to claims are not a thing of the past; as discussed below, Activision Blizzard has now been hit with a securities suit based on underlying sexual misconduct and discrimination allegations.
Continue Reading Sexual Discrimination and Harassment Allegations Lead to Securities Suit

In its recent report on securities suit filings in the year’s first half, Cornerstone Research noted that while securities suit filings generally in the first six months of the year were down, SPAC-related securities suit filings were up, with first half suit filings involving SPACs double the number of SPAC-related suits during the full prior year. As further evidence that this first half 2021 securities suit filing trend will continue as the year progresses, last week a plaintiff shareholder filed a securities class action lawsuit against a home healthcare equipment company that merged with a publicly traded SPAC in November 2019. As discussed below, this latest suit has much in common with many of the prior SPAC-related lawsuits, but it also has certain distinctive features as well.
Continue Reading Home Health Equipment Company Hit with SPAC-Related Securities Suit

Largely due to a “substantial reduction” in the number of merger objection lawsuit filings, as well as a decline in the number of Section 11 and 1933 Act securities class action filings, the number of federal and state court securities class action lawsuits filed in the first six months of 2021 “dropped considerably” compared to the second half of 2020, according to a new report from Cornerstone Research. Filings of core Section 10(b) suit filings were, however, only “down modestly.” The report, entitled “Securities Class Action Filings: 2021 Midyear Assessment,” can be found here. Cornerstone Research’s July 28, 2021 press release about the report can be found here. My own analysis of the 1H21 federal court securities class action lawsuit filings can be found here.
Continue Reading Cornerstone Research: Securities Suit Filings Declined in Year’s First Half

As readers of this blog know, from the very early days of the coronavirus outbreak COVID-19 related D&O lawsuits have been filed. Just as there have been new variants of the virus itself over the course of the pandemic, there have also been variants of the D&O lawsuits. The most recent variant of the COVID-19-related D&O lawsuit is the Delaware Chancery Court complaint filed earlier this month, in which the plaintiff in the derivative action alleges that corporate insiders profited by taking advantage of a drop in the company’s share price to grant themselves lucrative stock options. A copy of a redacted version of the shareholder plaintiff’s July 9, 2021 complaint can be found here. A copy of a July 21, 2021 Proskauer law firm blog post about the lawsuit can be found here.
Continue Reading A New COVID-19-Related D&O Lawsuit Variant

There are a lot of different ways you might look at securities class action litigation settlement data. You might, for example, look at average or median settlement amounts. You might look at the data in the aggregate. Or you could look at it geographically – say, according to the U.S. state in which the case was pending. That is exactly what ISS Securities Class action Services has done. In its latest report, entitled “The Largest U.S. Settlements By State,” the authors identify the largest settlement by U.S. state. The report is interesting and does answer a question that does come up from time to time. A copy of the report can be found here.
Continue Reading Looking at the Largest Securities Suit Settlements by State

As I noted in a prior post, last week the SEC filed an enforcement action against Stable Road Acquisition Corp., a special purpose acquisition company (SPAC), and its intended merger target, Momentus, relating to Momentus’s alleged misrepresentations, as well as Stable Road’s alleged lack of due diligence. Perhaps inevitably, a plaintiff shareholder has filed a securities class action lawsuit against Stable Road; Momentus; and other defendants, adding to the growing number of SPAC-related securities suits that have been filed this year. A copy of the July 15, 2021 complaint in the new securities lawsuit can be found here.
Continue Reading SPAC Subject to SEC Enforcement Action Hit with Follow-On Securities Suit

In a series of statements, comments, and staff actions, the SEC has in recent months evinced a growing concern with SPAC-related activities in the financial marketplace. The agency has now brought its first SPAC-related enforcement action (at least during the current era) against Momentus, Inc., a SPAC-merger target; Stable Road Acquisition Corp., the SPAC itself; and several other participants involved in the SPAC transaction, including the SPAC sponsor. This proceeding may be the first of many. The SEC’s July 13, 2021 press release about the proceedings can be found here. The SEC’s administrative order instituting cease-and-desist proceedings can be found here. The SEC’s separate civil action complaint against the CEO of the merger target can be found here.
Continue Reading SEC Charges SPAC, Merger Target, and Others with Securities Law Violations

In recent posts (here and here), I have noted the securities class action lawsuits that have been filed against U.S.-listed Chinese companies following a crackdown by the Chinese cybersecurity regulator. Now yet another U.S.-listed Chinese company has been hit with a securities suit following the cybersecurity regulator’s actions. On July 13, 2021, a plaintiff shareholder filed a securities class action lawsuit against 360 DigiTech, a Chinese company with securities listed on NASDAQ, following news that the company’s app had been removed from major app stores following Chinese investigations of a number of companies’ data security practices. The July 13, 2021 complaint can be found here.
Continue Reading Another U.S.-Listed Chinese Company Hit with Securities Suit Following Cybersecurity Regulator Crackdown