Coronavirus likely to affect securities litigation: Cornerstone

The recent filing of coronavirus-related securities class actions suggests the pandemic will affect future securities litigation, says an official of Cornerstone Research Inc., which released its latest accounting securities class action report Wednesday.

“Regulators and others are already focusing on the impact of COVID-19 on financial reporting disclosures and processes,” Elaine M. Harwood, vice president of the San Francisco-based organization, said in a statement.

“We will continue to monitor these developments to determine whether they translate into accounting allegations in future securities class action filings,” she said.

Earlier this month, a putative securities class action lawsuit was filed against a pharmaceutical company that allegedly falsely promised a quick coronavirus vaccine, and whose stock plunged once it failed to deliver.

According to the Cornerstone report, Accounting Class Action Filings and Settlements – 2019 Review and Analysis, there were a record 169 securities class actions involving accounting allegations during 2019, an 18.2% increase from 2018’s total.

The total number of accounting case filings in 2019 was nearly double the 2010-2018 average of 86, according to the report. The proportion of accounting case filings to total case filings, at 42%, was the second highest over the last 10 years, according to the report.

Cases are considered accounting cases if they involve allegations related to violations of Generally Acceptable Accounting Principles, auditing violations or weaknesses in internal control over financial reporting.

Cornerstone reported in January that plaintiffs filed 428 new class action securities cases in federal and state courts in 2019, the most on record and nearly double the 1997-2018 average.

More insurance and risk management news on the coronavirus crisis here.