Deals often beget securities class actions. Yet, despite the active mergers-and-acquisitions market in 2014, the number of new federal securities class actions barely budged from the level in 2013.
Last year, 170 securities cases were filed, four more than in 2013. And that number was 10 percent below the historical average of 189 filings observed annually between 1997 and 2013, according to a new report by Cornerstone Research.
Additionally, the total maximum dollar loss for the filings last year was $215 billion, about one-third the historical annual average of $630 billion, and at the lowest level since 1997, Cornerstone found.
John Gould, the head of Cornerstone’s Boston office, said in an interview that “one out of every 28 public companies was subject to litigation last year.” While that number equates to 3.6 percent of all public companies, the likelihood of getting sued remains above the historical average. Yet, companies in the S&P 500 were less likely to face suits than in any year since 2000.
The good news for companies is that “more cases are getting dismissed and a lower percentage are going to trial,” Gould said.
Cornerstone also found that although there was little increase in the number of suits, “the size of filings measured by dollar losses decreased dramatically.”