David H. Kistenbroker, Joni S. Jacobsen, and Angela M. Liu are partners at Dechert LLP. This post is based on a Dechert memorandum by Mr. Kistenbroker, Ms. Jacobson, Ms. Liu and Anna Q. Do.
Introduction
Overall, securities class action filings dropped in 2021, down 35% from 2020. [1] This decrease is driven largely by a drop in new merger and acquisition class actions. Similarly, the number of securities class actions against non-U.S. issuers dropped significantly from 88 in 2020 to only 42 in 2021. [2] In contrast, as compared to all securities class actions, the percentage of cases against non-U.S. issuers decreased, but only slightly, from 27% in 2020 to 20% in 2021.
In 2021, plaintiffs filed a total of 42 securities class action lawsuits [3] against non-U.S. issuers.
- As was the case in 2020, the Second Circuit continues to be the jurisdiction of choice for plaintiffs to bring securities claims against non-U.S. issuers. Roughly 75% of these 42 lawsuits (32) were filed in courts in the Second Circuit. A majority (20) of these lawsuits were filed in the Southern District of New York, followed closely by the Eastern District of New York (12). The Third, Ninth and Seventh Circuits followed with 5, 3 and 2 complaints, respectively.
- Continuing the trend in 2020, most non-U.S. issuer lawsuits were against companies with headquarters and/or principal place of business in China and Canada. Of the 42 non-U.S. issuer lawsuits filed in 2021, 18 were filed against non-U.S. issuers with headquarters and/or a principal place of business in China, and 7 were filed against non-U.S. issuers with a headquarters and/ or principal place of business in Canada, followed by 4 non-U.S. issuers with headquarters and/or principal place of business in the United Kingdom.
- g The Rosen Law Firm led with the most first-in-court filings against non-U.S. issuers in 2021 (12), followed by Pomerantz LLP (9). This is consistent with the trend in 2018-2020, when the Rosen Law Firm was the most active plaintiff law firm in this space. Also like the trend of the last several years, the Rosen Law Firm and Pomerantz LLP were appointed lead counsel in the most cases in 2021 (with 6 and 5, respectively), followed closely by Glancy Prongay & Murray LLP and Robbins Geller Rudman & Dowd LLP (with 3 each).
- The majority of securities class actions against non-U.S. issuers (26 of 42) were filed in the third and fourth quarters of 2021.
- While the suits cover a diverse range of industries, the largest portion of the suits involved the software and programming industry (10) and the biotechnology and drugs industry (7).
An examination of the types of cases filed in 2021 reveals the following substantive trends:
- About 24% of the cases involved alleged misrepresentations in connection with regulatory requirements and/or approvals (10). This includes seven cases involving alleged misrepresentations in connection with China’s regulatory requirements and/or approvals—with four involving China’s regulations on data protection and cybersecurity.
