Category Archives: Lies, Damn Lies, And Statistics

Compare and Contrast – Midyear 2022

NERA Economic Consulting and Cornerstone Research released their 2022 midyear reports on securities class action filings last month.  As usual, the different methodologies employed by the two organizations have led to slightly different numbers, although they both identify the same general trends.

The key findings include:

(1) The reports agree that filings are at steady levels as compared to 2021, with only a small number of M&A-related cases.  NERA finds that there were 101 filings in 2022 H1, while Cornerstone finds that there were 110 filings in 2022 H1 (up slightly from 2021 H2).

(2) SPAC filings continue to be a key component. NERA finds that there were 19 SPAC-related filings and Cornerstone finds that there were 18 SPAC-related filings. Both reports agree that SPAC filings are on pace to easily exceed the total SPAC filings in 2021.

(3) Cornerstone finds that SPAC, cryptocurrency, and COVID-19 filings remained elevated with 18, 10, and 8 filings respectively. On other hand, filings against non-U.S. issuers are on track to be less than half of 2020’s record high of 74, but in line with the 2012-2016 historical average.

(4) NERA finds that the most common allegation in cases filed in the first half of 2022 is misled future performance (30%).

The NERA report can be found here and the Cornerstone report can be found here.

Leave a comment

Filed under Lies, Damn Lies, And Statistics, Uncategorized

Compare And Contrast

NERA Economic Consulting and Cornerstone Research have released their respective 2021 annual reports on federal securities class action filings.  As usual, the different methodologies employed by the two organizations have led to slightly different numbers, although they both identify the same general trends.

The findings for 2021 include:

(1) The reports agree that there was a significant decline in filings, primarily driven by a sharp drop in the number of M&A-related filings (down over 80%).   NERA finds that there were 205 filings (compared with 321 filings in 2020), while Cornerstone finds that there were 218 filings (compared with 333 filings in 2020).

(2) Both NERA and Cornerstone analyzed the number of filings with COVID-19 related claims: NERA identifies 20 filings with COVID-19-related claims (less than in 2020), while Cornerstone identified 17 filings with COVID-19-related claims (the same as in 2020, but with fewer filings in the second half of the year).

(3) Filings related to special purpose acquisition companies (SPACS) rose significantly, constituting more than 10% of all filings.  NERA identified 24 SPAC-related cases, while Cornerstone identified 32 SPAC-related cases.

(4) The Second Circuit (New York) and Ninth Circuit (California) traditionally have been the locations with the most filings, but that peaked this past year.  According to Cornerstone, 72% of all standard filings were brought in those courts, the highest combined proportion of any two circuits since tracking began in 1997.

(5) NERA finds that if settlements related to merger objections, settlements with no cash payment to the class, and individual cases with settlements of $1 billion or greater are removed, the annual average settlement value in 2021 was $21 million.  That is the lowest annual average within the most recent 10 years.

The NERA report can be found here.  The Cornerstone report can be found here.

Leave a comment

Filed under Lies, Damn Lies, And Statistics, Uncategorized

Compare and Contrast

NERA Economic Consulting and Cornerstone Research have released their respective 2020 annual reports on federal securities class action filings.  As usual, the different methodologies employed by the two organizations have led to slightly different numbers, although they both identify the same general trends.

The findings for 2020 include:

(1) The reports agree that there was a significant decline in filings, with less than 400 overall filings for the first time since 2017.  The reports state that a drop in M&A-related cases is responsible for most of the decline, although “standard” filings alleging violations of Rule 10b-5, Section 11, and/or Section 12 were also down.  NERA finds that there were 326 filings (compared with 420 filings in 2019), while Cornerstone finds that there were 334 filings (compared with 427 filings in 2019).

(2) Both NERA and Cornerstone analyzed the number of filings with COVID-19 related claims: NERA identifies 33 filings with COVID-19-related claims, while Cornerstone identifies 19 filings with COVID-19-related claims.

(3) In 2019, there was a leap in the number of standard filings in the Second Circuit, which accounted for nearly twice the number of filings as the Ninth Circuit.  In 2020, however, the numbers reverted to the norm, with the Second Circuit (NERA – 69; Cornerstone – 77) and Ninth Circuit (NERA – 79; Cornerstone – 79) having a similar number of standard filings.  The Third Circuit had the next highest number of standard filings (NERA – 25; Cornerstone – 24).

(4) The percentage of cases brought against foreign issuers continues to rise.  Cornerstone finds that there were 74 standard filings against foreign issuers in 2020 (compared to 57 filings in 2019), representing 33% of all standard filings.

(5) NERA finds that if settlements related to merger objections, settlements with no cash payment to the class, and individual cases with settlements of $1 billion or greater are removed, the annual average settlement values have been stable over the last four years, ranging from $26 million to $31 million.

The NERA report can be found here.  The Cornerstone report can be found here.

Leave a comment

Filed under Lies, Damn Lies, And Statistics, Uncategorized

Compare and Contrast

NERA Economic Consulting and Cornerstone Research have released their respective 2019 annual reports on federal securities class action filings. As usual, the different methodologies employed by the two organizations have led to different numbers, although they both identify the same general trends.

The findings for 2019 include:

(1) The reports agree that there continue to be a record or near-record number of filings, with an increase in “standard” filings alleging violations of Rule 10b-5, Section 11, and/or Section 12 offsetting a decline in M&A-related cases.  NERA finds that there were 433 filings (the same as the 433 filings in 2018), while Cornerstone finds that there were 428 filings (compared with 420 filings in 2018).

(2) Over the last few years, the Second Circuit and Ninth Circuit have had a similar number of standard filings.  In 2019, however, both NERA and Cornerstone report that the number of Second Circuit standard filings was nearly double the number of Ninth Circuit standard filings (NERA – 103 (2d) v. 52 (9th); Cornerstone 108 (2d) v. 56 (9th)).  The Third Circuit had the next highest number of filings (NERA – 28; Cornerstone – 32).

(3) Filings against foreign issuers had steadily increased from 2013-2017, with these companies facing a disproportionate (as compared to their percentage of listings) risk of securities class action litigation.  In 2018, the numbers took a dip, but they have rebounded to a record high.  Cornerstone finds that there were 57 standard filings against foreign issuers in 2019, representing 24.3% of all standard filings.

(4) NERA reports a sharp increase in standard filings based on missed earnings guidance (from an average of 20% of filings over the past four years to 32% of filings in 2019).

(5) NERA finds that the average settlement value ($30 million) held steady and the median ($12.8 million) settlement value increased slightly.  However, the median settlement values in 2018 and 2019 were more than 25% higher than the median settlement values in the previous three years, reflecting a downward trend in the proportion of cases settled for less than $10 million.

The NERA report can be found here. The Cornerstone report can be found here.

Leave a comment

Filed under Lies, Damn Lies, And Statistics, Uncategorized

Compare and Contrast – Midyear 2019

NERA Economic Consulting and Cornerstone Research have released their 2019 midyear reports on securities class action filings.  As usual, the different methodologies employed by the two organizations have led to slightly different numbers, although they both identify the same general trends.

The key findings include:

(1) The reports agree that filings continue to be at near-record levels, driven by continued growth in “standard” filings alleging violations of Rule 10b-5, Section 11, and/or Section 12, even while M&A-related cases have declined.  NERA finds that there were 218 filings (compared with 217 filings in 1H 2018), while Cornerstone finds that there were 198 filings (compared with 199 filings in 1H 2018).

(2) Following the Cyan decision by the U.S. Supreme Court, there has been a surge in state court filings alleging Section 11 claims.  Cornerstone finds that this has continued in 1H 2019, with 19 cases brought in state courts (with over a third of these cases being accompanied by a federal filing alleging similar claims).

(3) NERA finds that there has been an increase in accounting-related claims, making up 37% of standard filings and notching the highest first half case count since the first half of 2011.

The NERA report can be found here and the Cornerstone report can be found here.

 

Leave a comment

Filed under Lies, Damn Lies, And Statistics, Uncategorized

Compare and Contrast

NERA Economic Consulting and Cornerstone Research have released their respective 2018 annual reports on federal securities class action filings.  As usual, the different methodologies employed by the two organizations have led to different numbers, although they both identify the same general trends.

The findings for 2018 include:

(1) The reports agree that filings continue to be at near-record levels, driven by a steady growth in “standard” filings alleging violations of Rule 10b-5, Section 11, and/or Section 12 and the continued shift to federal court of M&A-related cases.  NERA finds that there were 441 filings (compared with 434 filings in 2017), while Cornerstone finds that there were 403 filings (compared with 412 filings in 2017).

(2) Both NERA and Cornerstone report that approximately 8% of publicly-listed companies were subject to securities class actions in 2018.  While that is an all-time high, it also is a function of the fact that the overall number of publicly-listed companies has declined substantially over the last 25 years (the result of a combination of fewer IPOs and M&A activity).

(3) Filings against foreign issuers had steadily increased from 2013-2017, with these companies facing a disproportionate (as compared to their percentage of listings) risk of securities class action litigation.  In 2018, however, both NERA and Cornerstone find a decrease in these filings, although the overall number of filings against foreign issuers (Cornerstone – 47; NERA – 43) remains high as compared to the historical average.

(4) NERA reports that, in 2013, 24% of filings alleging violations of Rule 10b-5 contained insider trading allegations.  That percentage has dropped precipitously since 2013, with only 5% of last year’s filings containing insider trading allegations.  NERA attributes the decline to the regulatory crackdown on insider trading and the increased corporate use of Rule 10b5-1 trading plans.

(5) NERA finds that the average settlement value for standard cases (excluding settlements over $1 billion) increased from $25 million (2017) to $30 million (2018). Meanwhile, the median settlement value for these cases increased from $6 million (2017) to $13 million (2018).

The NERA report can be found here.  The Cornerstone report can be found here.

Leave a comment

Filed under Lies, Damn Lies, And Statistics, Uncategorized

Top 100 Settlements

With the dog days of summer comes the issuance of statistical reports on securities class actions.  ISS Securities Class Actions puts out an interesting report, now updated through 2016, on “The Top 100 U.S. Settlements of All Time.”  As it turns out, “all time” is actually from the passage of the Private Securities Litigation Reform Act of 1995 forward, but the report breaks down the settlements by amount, lead plaintiff, lead counsel, claims administrator, and the presence of a financial restatement.

Highlights:

(1) Six of the “Top 100 U.S. Settlements” were in the second half of 2016: Caremark, Genworth Financial, Household Int’l, Band of America, Pfizer, and MF Global Holdings.

(2) The plaintiffs’ firms with the most settlements on the list are Bernstein Litowitz (35 settlements) and Robbins Geller (17 settlements).

(3) Forty-three of the “Top 100 U.S. Settlements” have involved financial restatements.

Leave a comment

Filed under Lies, Damn Lies, And Statistics, Uncategorized

Compare and Contrast

NERA Economic Consulting and Cornerstone Research have released their respective 2016 annual reports on federal securities class action filings.  As usual, the different methodologies employed by the two organizations have led to different numbers, although they both identify the same general trends.

The findings for 2016 include:

(1) The reports agree that filings are up sharply.  NERA finds that there were 300 filings (compared with 228 filings in 2015), while Cornerstone finds that there were 270 filings (compared with 188 filings in 2015).  NERA usually reports higher filings numbers due to its methodology, which counts cases against the same issuer that are filed in different circuits as separate filings  (at least until they are consolidated).

(2) Both NERA and Cornerstone find that there has been a steady growth in “standard” filings alleging violations of Rule 10b-5, Section 11, and/or Section 12.  Most of the discrepancy between 2015 and 2016, however, is the result of a large increase in M&A-related cases (NERA – 88 filings; Cornerstone – 80 filings).  The increase is likely attributable to the fact that various state courts, most notably in Delaware, have issued recent decisions limiting the viability of “disclosure-only” settlements for this type of case.

(3) The Ninth Circuit led the nation in overall filings.  NERA notes, however, that relatively few M&A-related cases were filed in the Second Circuit.  The Second Circuit had the highest number of “standard” filings.

(4) The pharmaceutical, biotechnology, and healthcare sector easily had the most filings.  NERA and Cornerstone agree that around a third of all cases were brought against companies in this space.

(5) NERA finds that for cases filed and resolved between 2000 and 2016, a motion to dismiss was decided in 79% of the cases.  The outcome of those motions to dismiss was: granted with or without prejudice (44%), granted in part and denied in part (30%), and denied (25%).  Only 15% of cases filed over that same period reached a decision on a motion for class certification.

(6) NERA finds a significant increase in the average settlement amount to $72 million (up from $53 million in 2015, as adjusted for inflation).  However, that number was affected by two settlements of more than $1 billion.  If those settlements are removed, the average actually declined to $43 million.  The median settlement amount held fairly steady, as compared to the last few years, at $9.1 million.

The NERA report can be found here.  The Cornerstone report can be found here.

Leave a comment

Filed under Lies, Damn Lies, And Statistics, Uncategorized

Compare and Contrast

NERA Economic Consulting and Cornerstone Research (in conjunction with the Stanford Securities Class Action Clearinghouse) have released their 2014 annual reports on securities class action filings.  As usual, the different methodologies employed by the two organizations have led to different numbers, although they both identify the same general trends.
The findings for 2014 include:

(1) The reports agree that filings have stayed flat.  NERA finds that there were 221 filings (compared with 222 filings in 2013), while Cornerstone finds that there were 170 filings (compared with 166 filings in 2013).  NERA normally has a higher filings number due to its counting methodology (see footnote 4 of the NERA report).

(2) Cornerstone notes that companies in the S&P 500 were less likely to be targeted by a securities class action in 2014 than in any year measured (2000 through 2014).  Not coincidentally, the dollar losses associated with the 2014 filings were significantly below the historical average.

(3) NERA found a sharp decrease in the average settlement amount to $34 million (down from $55 million in 2013, but the 2014 average is roughly the same as the 2012 and 2011 averages).  The median settlement amount decreased 29% from $9.1 million (2013) to $6.5 million (2014).   NERA also notes that while 59% of securities class actions filed between 2000 and 2010 were settled or dismissed within three years, the number of pending cases has been rising since 2011, “suggesting a slow-down of the resolution process over that period.”

The NERA report can be found here. The Cornerstone/Stanford report can be found here.

Leave a comment

Filed under Lies, Damn Lies, And Statistics

Cornerstone Releases Midyear Report

Cornerstone Research (in conjunction with the Stanford Securities Class Action Clearinghouse) has released its 2014 midyear report on federal securities class action filings.

The findings for the first half of 2014 include:

(1) There were 78 filings, which closely matches the pace of the first half of 2013. Approximately one in sixty companies listed on a major exchange were sued.

(2) Healthcare, biotechnology, and pharmaceutical companies were the most frequent targets for securities class actions, accounting for 21% of the filings.

(3) The number of filings in the Sixth, Eighth, and Tenth Circuits was up sharply, already equaling or eclipsing the full year totals for 2013.

Quote of note (Professor Grundfest – Stanford): “The most intriguing new trend in the market concerns high-frequency trading and allegations related to Michael Lewis’s Flash Boys. There lawsuits are very much in the early stages, and raise issues with a degree of economic complexity that far surpass the challenges encountered in the typical class action securities fraud case as we know it.”

Leave a comment

Filed under Lies, Damn Lies, And Statistics