The number of securities class-action lawsuits filed in U.S. federal courts rose slightly in 2018 but the size of alleged investor losses surged, according to a report from New York-based NERA Economic Consulting published Tuesday.
The were 441 new securities class actions filed in U.S. federal courts in 2018, the report says, up from 434 filings in 2017. Last year’s total represents the largest number of filings since the aftermath of the dot-com crash in 2000.
In 2018, filings against technology firms rose by nearly 70% from 2017, the report says, “primarily due to cases alleging accounting issues or missed earnings guidance.”
While the number of class action filings only rose slightly, aggregate NERA-defined investor losses, a measure of total case size, reached a record level of US$939 billion in 2018, the report says, which is almost four times the average of the previous five years.
“While the number of filings was roughly unchanged compared to 2017, the pace of new litigation accelerated over the second half of the year and the average size of new cases was considerably larger,” says David Tabak, managing director at NERA.
The report says 351 securities class actions were resolved in 2018, which also represents a record, driven by a record number of case dismissals. Dismissals outnumbered settlements by a ratio of more than two-to-one.
Additionally, the average settlement came in at US$69 million in 2018, the report says, which represents a rebound from a near-record low in 2017. the median settlement in 2018 was US$13 million, more than double the median in 2017.