Investment Fraud Allegations Soar
The number of new lawsuits is the highest for the first half of any year since enactment of the 1995 Private Securities Litigation Reform Act, which heightened class securities fraud pleading requirements. It’s also a 49 percent spike from the second half of 2016, the data showed.
In the past six months, 4.7 percent of U.S. exchange-listed companies were sued in securities class actions. At that rate, 9.5 percent will be the subject of filings by year end—the highest since 1997, the report said.
Both traditional and M&A-related filings were at record levels. Traditional filings increased from 95 in the second half of 2016 to 131 in the first half of 2017. At the same time, M&A-related filings rose from 57 to 95. If the litigation rate of traditional securities class actions in the second half of 2017 equals that of the first half, the annual rate will nearly double the historical average, Dr. John Gould, a senior vice president at Cornerstone Research, told Bloomberg BNA.