Number of securities class-action filings dip; losses, crypto suits jump

The number of securities class-action filings decreased modestly last year, but the reported losses increased dramatically, says a report released Wednesday.

In addition, the number of cryptocurrency-related lawsuits more than doubled, according to the report issued by San Francisco-based Cornerstone Research Inc. and the Stanford Law School Securities Class Action Clearinghouse in Stanford, California.

The overall filing volume in federal and state courts declined to 208 in 2022, from 218 in 2021, which was below the 1997-2021 average of 228, the report said.

However, the maximum dollar loss and disclosure dollar loss, which reflect changes in defendant companies’ capitalization during the class period, rose 138% and 100%, respectively, the report said.

The disclosure dollar loss doubled to $593 billion in 2022 from 2021, while the maximum dollar loss increased to $2.43 trillion.

Core filings related to cryptocurrency, which excludes those related to merger & acquisition filings, more than doubled to a record 23, according to the report.

“Crypto is the new frontier in securities fraud litigation,” said Joseph A. Grundfest, the William A. Franke Professor of Law and Business (emeritus) at Stanford Law School and a former Securities and Exchange Commission commissioner, in a statement.

“The FTX implosion – combined with the failure of many crypto intermediaries -and the collapse of some crypto asset prices, will keep plaintiffs’ lawyers busy for years. If SPAC litigation is history, crypto litigation is the future, at least for now.”