Cornerstone Says Stockholder Suits Declined in 2020

We are pleased to share Cornerstone’s latest annual report on federal and state securities class actions, which reflects that new securities case filings fell substantially in 2020.

Plaintiffs filed 334 class action securities cases in 2020, down 22% from 427 in 2019, bucking a sustained upward trend in recent years (though still well above the annual average of 224 from 1997 to 2019). Of particular interest to this blog, primary contributors to the decline were (i) an accelerated decrease in M&A-related federal filings, which fell 38%, and (ii) a sharp drop in state 1933 Act filings — likely driven by the Delaware Supreme Court’s March 2020 ruling in Salzberg v. Sciabacucchi (discussed in prior posts, see here). Cornerstone reports that 86% of M&A-related cases were filed in the Third Circuit, all of them in the District of Delaware.

The data also reveal a spike in new filings involving cryptocurrency (11) or allegations related to COVID-19 (19), and a continued uptick in new filings involving SPACs (5) (for further background on recent SPAC developments see here). Given current developments, including tremendous fundraising levels for SPACs and the 1- or 2-year statute of limitation periods that apply under the securities laws, we expect that these trends will continue in 2021.

To review the complete report:

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.