The number of securities fraud case filings remained near record levels in the first half of 2019, according to a report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse released Wednesday.
The report, "Securities Class Action Filings – 2019 Midyear Assessment," found that plaintiffs filed 198 new federal class actions in the first six months of the year, in line with the 199 filed in the second half of 2018. The figure is shy of the 223 filing record, but well above the average of 106 filings since 1997.
The 126 core filings — those excluding merger and acquisition claims — were just one shy of the record set in the first half of 2017. The number of filings involving M&A transactions, however, dropped below 90 for the first time since the second half of 2016, according to the report. In the first half of 2019, M&A-related filings declined more than 20% to 72 from 91 in the second half of 2018.
"We have seen yet another strong half-year of filing activity in 2019," said Sasha Aganin, a vice president at Cornerstone Research and one of the report's authors, in a statement. "Core filings rose from 108 to 126 between the second half of 2018 and the first half of 2019. This increase is largely attributable to a delayed effect of market volatility in the last quarter of 2018 and to an uptick in filings in the consumer non-cyclical sector (which includes biotechnology, pharmaceutical and health-care companies) and against internet and high-tech firms."
The six megadollar disclosure loss filings (at least $5 billion) and 11 mega maximum dollar loss filings (at least $10 billion) propelled aggregate market capitalization losses to the highest and fourth-highest levels on record, respectively, according to the report. The megadollar disclosure losses during the first half of 2019, totaling $180 billion, was the highest on record. The figure represents the defendant firm's market capitalization between the trading day immediately preceding the end of the class period and the trading day immediately following the end of the class period. Total maximum dollar losses increased by 17% to $781 billion, a level more than double the historical average, the report found. The maximum losses are represented by the defendant firm's market capitalization from the trading day with the highest market capitalization during the class period to the trading day immediately following the end of the class period.