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Class action securities lawsuits up in 2015, second report says


Although the numbers differ, a second survey in as many days says the number of federal class action securities lawsuits filed last year was at its highest level since 2008.

Federal securities class action litigation rose to 189 filings in 2015, an 11% increase over 170 in 2014, according to “Securities Class Action Filings 2015 Year in Review,” a report issued by Boston-based Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse in Stanford, California, on Tuesday. There were a total of 223 class action filings in 2008, according to the report.

The latest survey also concluded that the “disclosure dollar loss,” which calculates investor losses at the time an alleged fraud is made public, rose 86% to $57 billion in 2014 to $106 billion in 2015 from $57 billion in 2014 to $106 billion in 2014 which was the largest annual such increase since 2008, and was caused by the reappearance of filings with DDL values exceeding $5 billion.

“To understand the 2015 data, one must appreciate the remarkably low level of 2014 activity,” said Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse and former SEC commissioner, in a statement.

“Securities class actions are driven by monster cases, and those cases were almost completely lacking in 2014, where not a single filing had market losses over $5 billion at the time when the alleged fraud was disclosed. Contrast that with five such cases in 2015. That’s all you really need to know to explain why 2015 looks so much more active than 2014 — but still below the peaks observed in the past,” Mr. Grundfest said.

New York-based NERA Economic Consulting reported Monday that securities class action cases totaled 234 in 2015, which was an 8% increase over 2014's 216 and 6% higher than the average rate of the preceding five years, according to its report, “Recent Trends in Securities Class action Litigation: 2015 Full-year Review.”

Spokesman for both NERA and Cornerstone said the different results are based on different methodologies. NERA consultant Stefan Boettrich said the primary difference is that, unlike Cornerstone, NERA will initially count two filings that are based on the same case twice.

Cornerstone said also in a statement, “we only count each defendant company once,” even if there are multiple filings related to the same allegations against the same defendant or defendants.