Amid the disruption caused by the global pandemic, the volume of U.S. securities class actions declined in 2020, according to a new report from Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse.

The total number of securities class action filings dropped by 22% last year, driven by a 38% decline in federal filings involving mergers and acquisitions. Excluding M&A activity, class action filings were down by 12% year over year, it reported.

While total class action activity was down, cases brought in the U.S. against Canadian companies hit an all-time high in 2020, Cornerstone Research reported.

There were 12 cases filed in U.S. federal courts involving Canadian firms last year, up from nine in 2019 and six in 2018.

The historical average for cases against Canadian companies between 1997 and 2019 was just five cases, the report said.

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Of all cases brought in 2020, a popular new issue involved allegations stemming from the Covid-19 pandemic, the report said.

There were 19 cases relating to Covid-19 in 2020. Filings involving cryptocurrency ranked second, with 11 cases.

“These [Covid-related] complaints included allegations that companies negatively impacted by the virus failed adequately to disclose the virus’s adverse effects on their financials, and that misleading statements were made about products produced or in development by the issuer,” the report said.

At the same time, with the growth of the special purpose acquisition company (SPAC) market in the U.S., class actions involving SPACs also emerged last year.

Cornerstone said that over half of all IPOs in 2020 involved SPACs, and there were five SPAC-related complaints filed in 2020.

“There is every reason to believe that plaintiffs will be carefully examining the SPAC market, and no one should be surprised if 2021 witnesses a sharp uptick in claims against SPAC issuers,” said professor Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse.

Despite the reduction in the volume of filings, the total dollar value of losses involved in class action litigation was essentially unchanged from 2019.

The report noted that there were 30 filings with alleged losses of at least US$10 billion in 2020, which was more than twice the historical average.