U.S. securities class action activity continued to surge in 2017, according to data published Monday from New York City-based NERA Economic Consulting.
There were 432 class actions filed in 2017, which is up by 89% over the past two years.
“For a second year in a row, growth was dominated by a record number of federal merger-objection filings, continuing a trend sparked by various state court decisions that restricted ‘disclosure-only’ settlements,” the report says.
The total size of securities case filings was US$334 billion, which was well above average for a second year, “mostly due to numerous large cases alleging various regulatory violations.”
“Allegations related to regulatory violations and misleading performance projections by management seem to be slowly supplanting claims related to accounting issues and missed earnings guidance,” the report says.
Class actions were resolved at a record rate in 2017, the report says, driven by a more than 40% spike in dismissals and a 30% increase in settlements. The average value of settlements fell to less than US$25 million, a drop of roughly two-thirds from 2016, due to a decline in large settlements.
The number pending cases in the federal system in 2017 increased to 785, up by 12% from 2016.