litigation trends

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In my recent round-up of the Top D&O stories of 2023, I noted that one of the key drivers contributing to the number of securities class action lawsuit filings last year was the presence of macroeconomic factors affecting company operations and financial results. Among these factors was supply chain disruption. While the pandemic-related disruptions that snarled supply chains in 2021 and 2022 appeared to have eased during 2023, the impact from the earlier supply chain disruptions continues to weigh on some businesses.

 In the latest example of how the prior supply chain disruption continues to affect businesses and how that can translate into securities litigation, on January 16, 2024, a plaintiff shareholder filed a securities lawsuit against advanced driver assistance system company Mobileye Global, after the company announced that it anticipated lower than expected sales of its key product because its leading customers had built up product in 2023 in order to avoid supply disruptions of the type that resulted from supply chain constraints in 2021 and 2022. This latest lawsuit shows how the consequences from pandemic related supply chain disruptions are continuing to weigh on businesses and result in securities litigation. A copy of the January 16, 2024 complaint can be found here.Continue Reading Supply Chain Woes Causing Inventory Build-Up Leads to Securities Suit

One of the most distinct securities class action lawsuit filing phenomena since the outbreak of COVID-19 in the U.S. in March 2020 has been the surge of pandemic-related securities suits,  particularly during the period 2020 through 2022. This securities suit filing trend even continued into 2023, although the incidence of COVID-related suits dwindled during the year. However, in an unexpected development, a plaintiff shareholder has now filed yet another COVID-related securities suit against BioNTech, the German biotechnology company that, along with its partner Pfizer, was lionized for helping to develop a COVID-19 vaccine. The company was hit with a securities suit after its share price declined following a sizeable inventory write-off. A copy of the January 12, 2024, complaint against the company can be found here.Continue Reading A New COVID-Related Securities Suit for the New Year

According to a new report, the number of excess fee and performance lawsuits filed in 2023 declined relative to the extraordinary filings levels in 2022, but excess fee lawsuit filings remained elevated. By contrast to prior years in which plaintiffs’ lawyers seemingly targeted benefit plans of all sizes, in 2023 the excess benefit plan lawsuits filed in 2023 primarily targeted companies with larger benefit plans. The number and aggregate total value of excess fee lawsuit settlements in 2023 was a record levels during the year. The January 8, 2024, report about the excess fee lawsuit filings, written by Daniel Aronowitz of Euclid Specialty, can be found here.Continue Reading Excess Fee Lawsuit Filings Declined in 2023 Due to Backlog of Prior Cases

For some time now, one of the hottest bets in the U.S. economy has been the electric vehicle industry. Until recently, manufacturers struggled to meet consumer demand. However, as 2023 progressed, something unexpected happened. Consumer demand for electric vehicles began to decline. A number of factors – including heightened interest rates – contributed to this development, but the perception of declining demand has set off alarm bells, particularly among EV manufacturers’ suppliers.

In an example both of how the declining demand can affect EV suppliers and the way that the decline can translate into securities litigation, on December 13, 2023, a plaintiff shareholder filed a securities suit against electric vehicle semiconductor supplier ON Semiconductor after the company announced declining sales of its automotive business segment products because of declining consumer EV demand. A copy of the plaintiff’s complaint can be found here.Continue Reading Semiconductor Company Hit with Securities Suit as EV Demand Declines

There was a time, not that long ago, when class action securities lawsuits were mostly about accounting and financial disclosure-related issues. In more recent years, securities suits increasingly are about operational issues, in which unfortunate business developments are the basis of securities fraud allegations — a phenomenon that has been called “event-driven litigation.” In the latest example of this kind of litigation, a plaintiff shareholder has filed a securities class action lawsuit against General Motors alleging that the company, which sustained a product recall related to its vehicle airbags and suffered a significant setback in its driverless vehicle development efforts when one of its driverless vehicles struck a pedestrian, misled investors about vehicle safety issues. A copy of the plaintiff’s December 8, 2023, complaint can be found here.Continue Reading Vehicle Safety Issues Trigger Securities Suit Against GM

Throughout 2023, I have noted examples of securities class action lawsuit filings involving companies whose operations or financial results were undercut by adverse macroeconomic conditions. The specific adverse economic conditions involved have included, for example, rising interest rates, heightened economic inflation, and supply chain and labor supply disruptions.

In yet another example of this phenomenon, a plaintiff shareholder has this week sued the software company Expensify in a lawsuit alleging not that a single adverse macroeconomic factor undercut the company’s results, but rather that adverse macroeconomic conditions in general hurt the company’s financial results and caused it to fall short of the growth projections it made in its IPO. As discussed below, the overall macroeconomic conditions that hurt this company and that were such a factor in securities class action litigation frequency overall in 2023 likely will continue as we head into 2024. There also is a D&O practitioner’s pointer below for those willing to read all the way to the end of this post. A copy of the November 2, 2023, complaint filed against the company can be found here.Continue Reading Securities Suit Alleges “Macroeconomic Headwinds” Undercut IPO Company

One of the most important securities class action litigation trends in recent years has been the wave of securities lawsuits involving SPACs. And while as time has passed since the peak of the SPAC IPO frenzy in late 2020 and early 2021, SPAC-related securities class action suits continue to be filed. The latest example is the securities suit filed earlier this week against the electric vehicle company Fisker, which merged with a SPAC in 2020. A copy of the November 27, 2023, complaint can be found here.Continue Reading EV Company Hit with SPAC-Related Securities Suit

Throughout the year, macroeconomic considerations have been an important factor in the number of securities class action lawsuit filings, including economic inflation, and supply chain and labor supply disruption. Another important factor has been rising interest rates, which, among other things contributed to several high-profile bank failures earlier this year, and which in turn led to the filing of follow-on securities suits.

In the latest example of macroeconomic factors affecting businesses and translating into a securities class action lawsuit filing, a plaintiff shareholder has filed a securities class action lawsuit against the standby power generator company, Generac Holdings, after the company announced that declining consumer spending due to rising interest rates caused the company second quarter 2023 revenues to fall below expectations. A copy of the November 21, 2023, complaint can be found here.Continue Reading High Interest Rates Undercut Consumer Demand, Leads to Securities Suit Filing

One factor that contributed significantly to the total number of securities class action lawsuits filed in 2021 and 2022 was the proliferation of SPAC-related securities suit filings. Although diminished in number this year relative to the two prior years, and while the filing pace has declined as the year has progressed, SPAC-related securities suits continue to be filed in 2023. In the latest example of this continuing trend, last week a plaintiff shareholder filed a securities suit against the executives and sponsor of a SPAC that merged with a health monitoring technology company that later went bankrupt. The named defendants include officers of the bankrupt company. While the suit is interesting as an example of the continuing threat of SPAC-related litigation, it may be even more important as an illustration of the way that geopolitical risk increasingly can translate into securities litigation.Continue Reading SPAC-Related Suit Shows How Geopolitical Risk Can Translate into Securities Litigation

Jeffrey Epstein’s life, misdeeds, and death make for a sordid and scandalous tale. Epstein’s story is the backdrop of a new securities class action lawsuit that has been filed against Barclays, its former CEO, James “Jes” Staley, and certain other company executives, in which the plaintiff alleges that Staley and Barclays misled investors about…