Insights

D&O Databox: 2018 Mid-Year Securities Class Action Report

July 11, 2018

Management Liability/D&O

The number of securities class action suits filed in the first half of 2018 was down from the year prior by 20 percent; this is according to Woodruff Sawyer’s mid-year “Flash Report,” written by my colleague Donna Moser. While this represents a decrease in activity compared to the first half of 2017, the 102 cases filed is still more than the 10-year average for filings in the first six months of the year.

<<Get your copy of the Flash Report instantly here>>

That said, we expect 2018 to have less filings overall from the record high last year of 210—somewhere between 175 and 200. This forecast is based on the historical drop in filings in the second half of the year.

SCA Suits Filed

In another turn of events, the biotech and technology sectors flip-flopped in the first half of 2018 compared to the first half of 2017 for the lead in class actions filings. Last year, biotech saw the most filings in the first half of the year (25 percent), but this year so far, it’s the technology sector that’s been hit the hardest.

Together, technology (33 percent of filings) and biotech (19 percent of filings) make up more than half of the class action filings through the end of Q2 2018.

Through the end of Q2 we’re also seeing an equal distribution of filings for newer IPOs (companies under five years) and more established companies (20-plus years) totaling 63 of the cases filed at or around 30 companies under each category.

0 to 5 years>5 to 10 years>10 to 20 yearsOver 20 Years
31%

(32 companies)

14%

(14 companies)

24%

(24 companies)

30%

(31 companies)

*Companies that have been trading on US Exchanges

Typically, it’s the younger companies that tend to have the lion’s share of securities class action cases.

The top settlement this quarter was neither in technology nor biotech but in energy with Petrobras at $3.3 billion (including $372M for 19 additional opt-out settlements)—one of the largest settlements in US history. Following Petrobras was Wells Fargo at $480 million. (See my recent article on Wells Fargo’s “naming and shaming.”

For more data on securities class actions through the first half of 2018, including information on filings by company size, market cap, industry and hot topics surfacing this year, download your copy of the Flash Report now.

Woodruff Sawyer’s Flash Report is powered by our proprietary DATABOX™, which tracks securities class action litigation filed against public company issuers and their directors and officers. For purposes of tracking issuer-related securities litigation, the D&O DATABOX focuses exclusively on securities class action lawsuits filed in federal courts against public companies by holders of common or preferred stock.

 

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All views expressed in this article are the author’s own and do not necessarily represent the position of Woodruff-Sawyer & Co.

Priya Cherian Huskins

Senior Vice President, Management Liability

Editor, Management Liability/D&O

Priya is a recognized expert and frequent speaker on D&O liability risk and its mitigation. In addition to consulting on D&O insurance, she counsels clients on corporate governance matters, including ways to reduce their exposure to shareholder lawsuits and regulatory investigations. Priya serves on the board of an S&P 500 public company and a large private company and has an impressive list of publications, speaking engagements, and awards for her influence and expertise in the industry. 

415.402.6527

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Priya Cherian Huskins

Senior Vice President, Management Liability

Editor, Management Liability/D&O

Priya is a recognized expert and frequent speaker on D&O liability risk and its mitigation. In addition to consulting on D&O insurance, she counsels clients on corporate governance matters, including ways to reduce their exposure to shareholder lawsuits and regulatory investigations. Priya serves on the board of an S&P 500 public company and a large private company and has an impressive list of publications, speaking engagements, and awards for her influence and expertise in the industry. 

415.402.6527

LinkedIn