Print
E-MailJohn Gould is senior vice president at Cornerstone Research. This post discusses a Cornerstone Research report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, titled “Securities Class Action Filings—2014 Midyear Assessment,” available here.
Number and Size of Filings
- Plaintiffs filed 78 new federal class action securities cases (filings) in the first six months of 2014—13 fewer than in the second half of 2013, but slightly higher than the 75 filings in the first half of 2013. This number was 18 percent below the historical semiannual average of 95 filings observed between 1997 and 2013.
- The total Disclosure Dollar Loss (DDL) of filings remained at low levels. Total DDL was $30 billion in the first half of 2014, 52 percent below the historical semiannual average of $62 billion.
Federal securities class action filings slumped in the first half of 2014.
- The total Maximum Dollar Loss (MDL) decreased again in the first half of 2014, falling to its lowest level in the last 16 years. For the first six months of 2014, MDL was $93 billion, or 70 percent below the historical semiannual average MDL of $315 billion.
- In the first six months of 2014, there were no mega DDL or MDL filings—filings with a disclosure dollar loss (DDL) of at least $5 billion or a maximum dollar loss (MDL) of at least $10 billion. This is the first time since the latter half of 1997 that there have been no mega filings.
Figure 1: Class Action Filings Summary
| Semiannual Average 1997 H1–2013 H2 |
2013 H1 | 2013 H2 | 2014 H1 | |
| Class Action Filings | 95 | 75 | 91 | 78 |
| Disclosure Dollar Loss ($ Billions) |
$62 | $25 | $79 | $30 |
| Maximum Dollar Loss ($ Billions) |
$315 | $115 | $163 | $93 |
Key Trends
- Class actions continued to be filed shortly after the end of the class period. In the first half of 2014, the median lag time between the end of the alleged class period and the filing date of the lawsuit was 12 days.
The first half of 2014 showed a decrease in filings against S&P 500 companies.
- Continuing a three-year trend, in the first half of 2014 the number of filings declined against companies with large market capitalizations, as represented by firms in the S&P 500.
- Healthcare, biotechnology, and pharmaceutical companies (included in the Consumer Non-Cyclical sector) together accounted for 21 percent of
total filings in the first half of 2014. As in 2012 and 2013, companies in this industry grouping were most frequently the subject of a class action, with biotechnology firms being the most common targets of class actions so far in 2014. - Filing activity in the first half of 2014 was less concentrated in the Second and Ninth Circuits than in the two most recent semiannual periods. Filings for the first half of 2014 in the Sixth, Eighth, and Tenth Circuits have already equaled or eclipsed the number of filings in those circuits for the full year of 2013.
The complete publication is available here.
