The number of securities class-action lawsuits filed in 2022 decreased for the third year in a row, according to a report released Wednesday by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse.
In 2022, plaintiffs filed 208 securities class-action lawsuits in federal and state courts, down from 218 cases in 2021 and a significant decrease from 332 cases in 2020 and 427 cases in 2019, according to the report, "Securities Class Action Filings — 2022 Year in Review." This is mostly due to a continued decline in federal mergers and acquisitions filings, which reached the lowest number seen in one year since tracking began in 2009.
On the other hand, core filings — those excluding mergers and acquisitions — increased by one in 2022, reaching 201 cases. This is despite the fact that core federal filings related to special purpose acquisition companies, or SPACs, decreased by 27% from 2021, the report said.
"Following 2021, which saw a surge in SPAC-related filings, core federal SPAC filings were on pace for a record high in 2022, with 18 filings in the first half of the year, before slowing to only six filings in the final six months," said Alexander "Sasha" Aganin, the report's co-author and a Cornerstone Research senior vice president, in a news release Wednesday. "This was somewhat unexpected, as shareholders traditionally bring more core filings when the stock market declines."
Though core filings only saw an increase of one, there was a steep increase in the cumulative size of filings. The Disclosure Dollar Loss index was the highest on record, doubling to $593 billion in 2022. The Total Maximum Dollar Loss index increased by 138% to reach $2.43 trillion, the highest amount in 20 years, the report said.
Core federal filings related to COVID-19 reached a record high of 20 filings in 2022, up from 17 during each of the previous two years. Cryptocurrency-related filings saw more than a twofold increase from 2021, with 23 filings in 2022.
"Crypto is the new frontier in securities fraud litigation," said Joseph A. Grundfest, the emeritus William A. Franke professor of law and business at Stanford Law School and a former SEC commissioner, in the news release. "The FTX implosion — combined with the failure of many crypto intermediaries — and the collapse of some crypto asset prices, will keep plaintiffs' lawyers busy for years. If SPAC litigation is history, crypto litigation is the future, at least for now."