Why are securities class action filings at record high?

Federal class action securities fraud filings hit a record pace in the first half of 2017 and are on track for a year-end total that hasn’t been seen since 2001.

From Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse:

“Over the past six months, plaintiffs initiated 226 securities fraud class actions in federal court, more than in any equivalent period since enactment of the Private Securities Litigation Reform Act of 1995 (PSLRA).”

The first half of 2017 saw 4.7 percent of U.S. exchange-listed companies sued in federal securities class actions:

“If activity continues at the same pace, 9.5 percent of exchange-listed companies will be the subject of filings in 2017—the highest annual rate since 1997.”

Pharmaceutical firms were the most common targets of filings, according to the report.

A significant factor in the record number of filings? The continued upsurge in merger objection lawsuit filings. The D&O Diary has more on this trend.

Both traditional and M&A-related filings were at record levels. Traditional filings increased from 95 in the second half of 2016 to 131 in the first half of 2017. At the same time, M&A-related filings rose from 57 to 95.

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