Cornerstone Research: Securities class actions on the rise, fueled by M&A-related class actions

Last week, Cornerstone Research published Securities Class Actions Filings–2016 Midyear Assessment. The report describes a surge in federal securities class action filings, which rose 17 per cent between the last half of 2015 and the first half of 2016.  Much of the increase has been driven by class actions involving mergers and acquisitions.

‘At the current pace, M&A-related filings in federal courts will double the annual numbers we have observed in the last four years. The January 2016 Delaware Court of Chancery decision in Trulia, which makes disclosure-only settlements more difficult to obtain, may have increased the likelihood that plaintiffs will again seek federal jurisdiction for M&A-related class actions,’ said Dr. John Gould, a senior vice president of Cornerstone Research. ‘We are releasing a report next week that looks in greater detail at M&A-related shareholder actions in both federal and state venues.’

Of course, the absolute number of M&A-related securities actions remains relatively small: 24 in the first half of 2016 versus 9 in the second half of 2015. However, this is one more data point suggesting that the Trulia decision may be driving M&A lawsuits (and disclosure settlements) to other venues.