Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse recently announced that their midyear assessment was out, which revealed that the first half of 2016 was a busy one for securities class-action filings.
The first half of this year saw the filing of 119 new federal securities class action cases, which calculated to a 17 percent increase over the last half of 2015. The percentage is even higher for federal filings of class-action cases involving mergers and acquisitions: an increase of 167 percent in the first half of 2016 over the last half of 2015.
According to Dr. John Gould, a senior vice president at Cornerstone Research, at this current clip, M&A-related filings will double the last four years’ annual numbers. Dr. Gould cited the Delaware Court of Chancery’s decision In re Trulia, Inc. Stockholder Litigation in January 2016 as a likely cause. The growing state skepticism of disclosure-only agreements means an increase in plaintiffs seeking federal jurisdiction.
Dr. Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse and former SEC Commissioner, points out another shift of note: Section 11 litigation moving from federal to state court. He said that if the Supreme Court grants a petition to a defendant who had been shut out of federal court, the “ruling could have a major effect on the future evolution of Section 11 litigation.”
The sector with the most filings was Consumer Non-Cyclical — biotechnology, pharmaceutical and healthcare companies. And the Ninth and Second Circuits have also been popular, making up 62 percent of filings in the first half of 2016.