Bloomberg Law
July 29, 2020, 8:06 PM

Securities Class Actions Hit Four-Year Low, Report Says

Andrew Ramonas
Andrew Ramonas
Securities Regulation Reporter

Investors have brought the fewest number of class action lawsuits since 2016 as Covid-19 takes a toll, according to a new report.

The 182 securities class actions filed in the first half of 2020 represented an 18% drop from the 221 class actions in the second half of 2019, Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse said in a joint report released Wednesday. The study attributed at least some of the decrease to the coronavirus.

The semiannual tally, which does include 11 coronavirus-related cases, is the lowest amount since the 160 cases filed in the second half of 2016.

But the 2020 filing total was still above the historical semiannual average of 112 cases from 1997 to 2019.

“I think the surprising thing is it has remained so high,” said Timothy Perla, a Boston-based partner with Wilmer Cutler Pickering Hale and Dorr LLP.

Drop in Mergers

This year’s decrease affected both mergers and acquisitions cases and core lawsuits, which include all federal and state Securities Act of 1933 class actions that aren’t M&A filings.

The coronavirus drove an M&A slide of 25%, said former SEC Commissioner Joseph Grundfest, director of Stanford’s Securities Class Action Clearinghouse.

“COVID-19 depressed M&A activity, and without M&A activity, you can’t have M&A litigation,” he said in a statement.

But Grundfest and Cornerstone Research senior vice president Sasha Aganin weren’t sure what caused a 13% dip in core cases.

One would expect cases related to stock price drops to increase rather than decline from 2019, for example, he said.

“The puzzle is not the number of filings in the first half of this year—this number was higher than at the height of the financial crisis in the second half of 2008,” Aganin said in a statement. “The puzzle is why there were so many filings in 2019 when financial markets were relatively calm and rising.”

Circuit Activity

The U.S. Court of Appeals for the Second Circuit, which includes New York, and the Ninth Circuit, which includes California, continued to handle a majority of the core class actions.

But while the Ninth Circuit’s caseload grew, the number of lawsuits in the Second Circuit decreased.

The Second Circuit still saw the most activity overall with 40 lawsuits, compared to the Ninth Circuit, which had 35 filings.

The Third Circuit, which includes Delaware, handled most of the M&A cases, though its volume dropped from 77 lawsuits in the second half of 2019 to 59 cases in the first half of this year.

To contact the reporter on this story: Andrew Ramonas in Washington at

To contact the editor responsible for this story: Michael Ferullo at; Laura D. Francis at