Sharp Increase In Securities Class Actions

The number of securities class action lawsuits this year is on track to be more than double the annual numbers observed in the previous four years, according to recent findings from Cornerstone Research. One particular Delaware Court of Chancery decision early this year, according to a Cornerstone official, may account for some of the increase, particularly in M&A related class actions. Another significant trend noted by Cornerstone is a shift in Section 11 cases, which allege false or misleading registration statements, from federal to state courts, where plaintiffs “have obviously calculated that they are likely to achieve more plaintiff-friendly outcomes,” according to Professor Joseph A. Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse and former SEC Commissioner.