There were 428 securities class-action lawsuits filed in 2019 — a record number, according to a report released Wednesday by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse.
The suits were filed across federal and state courts, eclipsing the 420 cases in 2018. The number of core filings — those not focused on mergers and acquisitions — increased for the seventh straight year, this time to 268 from 238, according to the report, "Securities Class Action Filings — 2019 Year in Review."
Mergers and acquisitions filings dropped to 160 in 2019 from 182 the year prior.
The impact of the U.S. Supreme Court's 2018 decision in Cyan Inc. vs. Beaver County Employees Retirement Fund continues to reverberate, Cornerstone noted in a news release. In that case, the high court issued a unanimous opinion allowing plaintiffs to assert claims in state courts under the Securities Act of 1933. The report found those claims in state courts rose to 49 in 2019, a 40% increase from the previous year. Almost half of state claims had parallel actions in federal court.
"The significant increase in state actions following Cyan indicates plaintiffs are modifying their approach, and we will continue to monitor the trend," Alexander "Sasha" Aganin, Cornerstone Research senior vice president and co-author of the report, said in the news release.
The likelihood of an S&P 500 company being sued declined after a decade high in 2018 (9.4%). Of the companies in the S&P at the beginning of 2019, 7.2% were a defendant in core filings throughout the year.
The report's Maximum Dollar Loss index showed a slight decrease in 2019 — to $1.2 trillion from a record high $1.3 trillion in 2018. For the second consecutive year, there were at least 20 mega MDL filings, compared with 14 in 2017, the report noted. Mega filings — those with an MDL of at least $10 billion — primarily involved pharmaceutical, technology and communication companies, the report found.