This update provides an overview of the major developments in federal and state securities litigation since our Securities Litigation 2023 Year-End Update. A recent NERA Economic Consulting (NERA) study provides an overview of recent developments in filings. This section highlights several notable trends.

Filing Trends 

Figure 1 below reflects the federal filing rates from 1996 through 2024. In the first half of 2024, 112 federal cases were filed. On an annualized basis, that number largely matches the number of federal filings in 2023, but it is considerably lower than in the peak years of 2017-2019. Note, however, that this figure does not include class action suits filed in state court or state court derivative suits, including those in the Delaware Court of Chancery.

Figure 1:

Mix Of Cases Filed In 2023

 Filings By Industry Sector

As shown in Figure 2 below, the distribution of non-merger objections and non-crypto unregistered securities filings in the first half of 2024 varied somewhat from 2023. Notably, after a dip in 2023, the “Health and Technology Services” sector percentage returned to the percentages seen in 2021 and 2022. Similarly, the percentage of “Electronic Technology and Technology Services” filings increased in 2024, returning to levels seen in 2021 and 2022. Together, “Health and Technology Services” and “Electronic Technology and Technology Services” filings once again comprised over 50% of filings after dipping to 41% in 2023. Meanwhile, “Finance” sector filings decreased from 18% to 11%.

Figure 2:

Filings By Type

As shown in Figure 3 below, Rule 10b-5 filings make up the vast majority of federal filings so far this year. In fact, projecting out to a full year, filings of other types are slated to end up at their lowest levels in years.

Figure 3:

Filings By Circuit 

Figure 4 provides insight into the distribution of federal filings by Circuit. Most filings occur in the Second and Ninth Circuits. Notably, the number of filings in the Second Circuit has been trending down since 2021. By contrast, the number of filings in the Ninth Circuit has stayed steady or increased over that same period.

Figure 4:

Event-Driven And Other Special Cases

Figure 5 illustrates trends in the number of event-driven and other special case filings since 2020. The number of Artificial Intelligence-related filings already equals the total number of such filings in 2023 and 2022. By contrast, SPAC and Cybersecurity and Customer Privacy Breach filings have decreased steadily since 2021. And after 11 such filings in 2023, zero Banking Turmoil cases have been filed this year.

Figure 5:

Settlement Trend

As reflected in Figure 6 below, the average settlement value so far in 2024 is $26 million. That is a sizable drop from the past two years. If it remains at that level, it would be the second-lowest average settlement value on an inflation-adjusted basis in nearly a decade. (Note that the average settlement value excludes merger-objection cases, crypto unregistered securities cases, and cases settling for more than $1 billion or $0 to the class.)

Figure 6:

As for median settlement value, that value has likewise dropped noticeably from 2022 and 2023. (Note that median settlement value excludes settlements over $1 billion, merger objection cases, crypto unregistered securities cases, and zero-dollar settlements.)

Figure 7:

 This post comes to us from Gibson, Dunn & Crutcher LLP. It is based on the firm’s memorandum, “Securities Litigation 2024 Mid-Year Update,” dated September 4, 2024, and available here.