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New securities class-action suits decline in first half: Report

class action

The number of new securities class-action lawsuits filed in federal and state courts declined in the first half, compared with last year’s second half and was the lowest level since the second half of 2016, according to a report released Wednesday.

The total of 182 new securities class-action lawsuits filed in this year’s first half was higher than the historical average, but 18% lower than the number filed in 2019’s second half, according to the report by San Francisco-based Cornerstone Research Inc. and the Stanford Law School’s Securities Class Action Clearinghouse in Stanford, California. 

Sasha Aganin, report co-author and Cornerstone Research senior vice president, said in a statement, “The puzzle is not the number of filings in the first half of this year – this number was higher than at the height of the financial crisis in the second half of 2008. The puzzle is why there were so many filings in 2019 when financial markets were relatively calm and strong.”

Among other findings, the report said federal and state court class actions alleging claims under the Securities Act of 1933 declined to 11 in this year’s first half, compared with 29 during 2019’s second half, despite recent initial public offerings trading below offering prices.

Cornerstone and Stanford said in January that plaintiffs filed 428 new class-action securities cases in federal and state courts in 2019, which was the most on record and nearly double the 1997-2018 annual average. There were 420 filed in 2018.