VERIFIABLE INDEPENDENCE THROUGH PROACTIVE AND UNIFORM

APPLICATION OF EVENT STUDY ANALYSIS 

PUBLICATIONS

"Q2 Stock Drop Stats Buoy High Court's Goldman Ruling" Law360

July 9, 2021

Private enforcement of the federal securities laws is mission-critical to sustain the transparency of America's capital markets and uphold the rules of engagement between public corporations and shareholders that trust directors and officers to lead these institutions on their behalf.

According to our data and analyses - which are derived from proactive, independent, claim-specific, single-firm event study analyses - the second quarter of 2021 is tied with the second quarter of 2020, with roughly two of every five, or 39%, alleged stock drops claimed against U.S. issuers exhibiting an absence of back-end, or indirect, price impact.

"3 Reasons Securities Fraud Litigation Exposure Fell in Q1" Law360

April 9, 2021

In anticipation of a U.S. Supreme Court decision in Goldman Sachs Group, Inc. v. Arkansas Retirement System, tempered filing frequency and lower severity of fraud-on-the-market claims against directors, officers, and their respective U.S.-listed corporations led to a material decrease in Rule 10b-5 private securities fraud litigation exposure during the first quarter of 2021.

Based on our monitoring of securities class actions, we posit that three factors have contributed to U.S. issuers' and non-U.S. issuers' lowest exposure since 2018 to securities class action that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act, and SEC Rule 10b-5 promulgated thereunder.

"Limiting The Severity Of Deficient Securities Fraud Claims" Law360

January 8, 2021

In 2018, Columbia Law School professor John C. Coffee Jr. indicated that the "scope of 'event-driven' litigation could expand rapidly," which it has, and led to successful recoveries for public equity investors in BP PLC in 2017, Petrobras in 2018, Signet Jewelers Ltd. in 2019 and Equifax Inc. in 2020, among others.

As 2021 quicks off and investors frolic on the peaks of public equity valuations, the sustained frequency of securities class actions since 2017 continues to layer on new long-tail claims on insurers' bloated inventories.  The growth and evolution of Rule 10(b)-5 private securities fraud litigation has been manna from heaven for the trial bar.  This has not been the case for insurers in the professional liability insurance industry.

"Guest Post: Second Circuit Ruling Exposes D&Os to Exchange Act Claims Based on Biased Short-Seller Research" The D&O Diary

December 3, 2020

On September 25, 2019 District Judge Honorable Loretta A. Preska of the Southern District of New York dismissed the securities class action against the U.S.-listed Chinese company TAL Education Group because "there is no material misrepresentation here so there can be no scienter."  On, November 25, 2020, the 2nd Circuit Court of Appeals reversed the district court's ruling and remanded the case back for further proceedings.  According to the amended class action complaint, the alleged fraud hinges on a single alleged corrective disclosure from a third party disseminator - Muddy Waters Research - a well-established short-seller...

"TPLF, Short-Seller Use Undermines Securities Class Actions" U.S. Chamber Institute for Legal Reform

August 26, 2020

Two factors in the securities class action arena are exacerbating the potential for conflicts of interest according to an expert analysis by Nessim Mezrahi in Law360.  According to Nessim's analysis, the sue of and reliance on activist short-seller reports as a basis to initiate securities class action claims, and privileged third-party litigation funding (TPLF) agreements have increased the chances of conflicts of interest in securities class actions.

"Funder, Short-Seller Use Undermines Securities Class Actions" Law360 - Opinion

August 24, 2020

Two factors in the securities class action arena are exacerbating the potential for conflicts of interest: the use of and reliance on activist short-seller reports as a basis to initiate securities class action claims, and privileged third-party litigation funding agreements.

These two seemingly distinct factors are related due to their potential to breed systemic conflicts of interest that inhibit the effective private enforcement of our federal securities laws if they are left to proliferate without warranted judicial scrutiny.

"Fed. Courts Are Best Regulator Of Securities Class Actions" Law360 - Opinion

June 19, 2020

In their working legal paper, law professors Jill E. Fisch and Jonah B. Gelbach posit: "Federal judges are poorly positioned to weigh the policy considerations reflected by the tradeoff between confidence level and power" in single-firm event studies that are used and relied upon to evaluate market efficiency, price impact, and loss causation in securities class actions that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission. 

"First-Quarter Securities Class Actions Respond To Outbreak" Law360

April 10, 2020

Transparency is paramount in the securities class action arena. Directors and officers, as well as institutional investors, rely on the rule of law and the duty of candor of their lawyers to seek and attain justice through the judiciary process.

Amid the current pandemic-driven economic correction, U.S. publicly traded corporations - and their insurers - are in pole position to showcase the resiliency of the American economy.  On March 26, Thomson Reuters reported that "there are plaintiffs' lawyers who will try to take advantage of the [COVID-19] crisis, just as there are defense lawyers and companies who will do the same."

"Assessing Securities Class Action Risk With Event Analysis" Law360

January 22, 2020

According to a recent article in the Harvard Law School Forum on Corporate Governance, the board of directors of a U.S. publicly traded corporation "has a fiduciary duty to promote the best interests of the corporation, and in fulfilling that duty, directors must exercise their business judgement in considering and reconciling the interests of various stake holders and their impact on the business of the corporation.

Another says that this new era of corporate governance prompts "greater director engagement in risk oversight and monitoring activity, renewed emphasis on management-to-board reporting and increased director sensitivity to recognizing possible 'red flags.'"

"Securities Class Period Selection Deserves Greater Scrutiny" Law360 - Opinion

October 24, 2019

The class period interval in securities class actions that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 is the second most fundamental determinant of the magnitude of potential aggregate - or classwide - damages.

Undoubtedly, the first is the number of shares of common stock sold by participants in the market in response to an alleged corrective disclosure that is alleged to be related to a specific misstatement or omission disseminated by directors and officers.

"Time To Resolve Post-Cyan Securities Class Action Confusion" Law360 - Opinion

July 24, 2019

The Supreme Court decision in Cyan Inc. v. Beaver County Employees Retirement Fund "swings the doors of state courts wide open to actions asserting '33 Act claims against issuers, officers, directors, underwriters, and others involved in the securities offering process."  The decision has birthed ramifications that deepen the knowledge gap between business entrepreneurs that aim to take a company public in the U.S., and the professionals that will work to protect them once the bell rings.

According to a June 18, 2019, article titled "D&O Insurance Costs Soar as Investors Run to Court Over IPOS," the premiums that corporations incur to protect their directors and officers against alleged violations of the Securities Act of 1933 have "increased as much as 200% in the last three years."  Securities Act claims that are litigated in a state forum inhibit transparency in the securities class action arena.  There are well-documented effects of Cyan that are contributing to global skepticism of the "American-style entrepreneurial litigation" system.

"An Analytical Approach To Defending Securities Class Action Claims" Law360

June 20, 2019

Since the event-driven securities class action lawsuit against PG&E Corporation was filed one year ago, plaintiffs counsel have filed 211 securities class action complaints that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 against U.S.-based public corporations.  During the preceding 12 months, 59 of the 211 class action complaints that allege violations of Rule 10b-5 have been filed against a defendant company that had already been sued for similar allegations of fraud on the market.

 

A price impact analysis of the 152 first-identified securities class action complaints against directors and officers of U.S.-based corporations, indicates that a total of 264 alleged stock price declines are related with corrective disclosures that claim to be rectifying the corresponding alleged misstatements or omissions.  Of the 264 alleged corrective disclosures presented in 152 securities class action complaints, damages claimed by shareholders of common stock on 41 stock price declines do not meet the threshold of indirect price impact to warrant class action treatment according to the U.S. District Court for the Northern District of Texas' 2015 ruling in Erica P. John Fund Inc. v. Halliburton Co. 

"Exposure To Market Fraud Suits Is Not A Major Risk" Law360

February 21, 2019

Crude measures of exposure to securities class actions that allege violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 take the "change in target companies' market capitalization over the class period."  This measure of securities class action exposure to allegations of fraud-on-the-market exposure misses the mark.

A more accurate measure of such exposure accumulates the decline in market capitalization of the defendant corporation only during trading sessions that correspond with the timing of the alleged corrective disclosures.  An even more accurate measure of exposure accumulates the decline in market capitalization of the defendant corporation only during trading sessions that correspond with statistically significant stock price impacts in response to information corrective alleged misstatements of omissions.

PRESS RELEASES & NEWS

Global Corporate Exposure to Rule 10b-5 Securities Class Actions Amounts to $37.7 billion in 2Q 2021

July 9, 2021

Global exposure of publicly traded companies and their directors and officers to stock-drop securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, amounts to $37.7 billion in 2Q'21 - in line with $37.8 billion reported in 1Q'21. 

U.S. SCA Rule 10b-5 Exposure of U.S. issuers amounts to $30.5 billion in 2Q'21, a decline of 9.2% relative to 1Q'21. ADR SCA Rule 10b-5 Exposure of non-U.S. issuers that trade via American Depositary Receipts (ADRs) on U.S. exchanges amounts to $7.2 billion in 2Q'21, a material increase of 68.2% relative to 1Q'21.

SAR Launches Quarterly Rule 10b-5 Settlement Rates in Collaboration with ISS Securities Class Action Services (ISS SCAS)

May 7, 2021

SAR, an industry pioneer in the development of independent securities class action data analytics, today announced the launch of SAR Rule 10b-5 Settlement Rates that leverage the accurate settlement reporting and claim recovery services of ISS Securities Class Action Services (ISS SCAS). 

SAR's Rule 10b-5 Settlement Rates are updated and published on a quarterly basis to enhance claim valuation transparency on filed securities class actions that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder. SAR's independently quantified securities class action settlement rates support key industry stakeholders with the evaluation of potential settlement value throughout the lifecycle of a securities class action.  

Global Corporate Exposure to Rule 10b-5 Securities Class Actions Amounts to $37.8 billion in 1Q 2021

April 9, 2021

Global exposure of publicly traded companies to stock-drop securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, amounts to $37.8 billion in 1Q'21 - a decline of 78.8% relative to 4Q'20.

U.S. SCA Rule 10b-5 Exposure of U.S. Issuers amounts to $33.6 billion in 1Q'21, a material decline of 65.7% relative to 4Q'20. ADR Rule 10b-5 Exposure of non-U.S. issuers that trade via American Depositary Receipts (ADRs) on U.S. Exchanges amounts to $4.3 billion in 1Q'21, a material decline of 94.6% relative to 4Q'20.

Global Corporate Exposure to Stock Drop Securities Class Actions Amounts to $177.1 billion in 4Q and $438.5 billion in 2020

January 8, 2021

Exposure of directors and officers to stock-drop securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, amounts to $177.1 billion in 4Q'20. 

U.S. SCA Rule 10b-5 Exposure of U.S. issuers amounts to $97.8 billion in 4Q'20, a slight decrease of 4% relative to 3Q'20. ADR SCA Rule 10b-5 Exposure of non-U.S. issuers that trade via American Depository Receipts (ADRs) on U.S. exchanges amounts to $79.3 billion in 4Q'20, an increase of 153% relative to 3Q'20.

Global Corporate Exposure to Stock Drop Securities Class Actions Amounts to $133.2 billion in 3Q 2020

October 9, 2020

Exposure of directors and officers of U.S. issuers and non-U.S. issuers to stock-drop securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, amounts to $133.2 billion in 3Q'20. 

Global Corporate Exposure to Stock Drop Securities Class Actions Amounts to $53.1 billion in 2Q 2020

July 10, 2020

Exposure of directors and officers of U.S. issuers and non-U.S. issuers to stock-drop securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, amounts to $53.1 billion in 2Q'20. 

Global Corporate Exposure to Alleged Violations of Rule 10b-5 under the Exchange Act Amounts to $75.2 billion in 1Q 2020

April 10, 2020

Global exposure of U.S. issuers and non-U.S. issuers to securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, amounts to $75.19 billion in 1Q'20.

U.S. Corporate Exposure to Alleged Violations of the Securities Exchange Act Amounts to $50.9 billion in 4Q 2019 and $321.1 billion in 2019

January 10, 2020

Aggregate exposure of U.S. public corporations to securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Exchange Act amounts to $50.9 billion during 4Q of 2019.

SAR Closes on $1 Million In Seed Funding, Grows Leadership Team, and Expands SCA Data Analytics Coverage

November 26, 2019

SAR, LLC (SAR), a securities class action (SCA) data analytics software company, has closed on its final seed round, raising a total of $1 million in seed capital from a group of angel investors.  SAR is an independent and highly specialized provider of SCA data analytics services. 

U.S. Corporate Exposure to Alleged Violations of the Securities Exchange Act Amounts to $68.4 billion in 3Q 2019

October 10th, 2019

Aggregate exposure of U.S. public corporations to securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Exchange Act amounted to $68.4 billion during 3Q of 2019. Cumulative SCA Exchange Act exposure for 2019 amounts to $270.1 billion.

U.S. Corporate Exposure to Alleged Violations of the Securities Exchange Act Amounts to $135.1 billion in 2Q 2019

July 10, 2019

Aggregate exposure of U.S. public corporations to securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act amounted to $135.1 billion during the second quarter of 2019.

Corporate Exposure to Alleged Violations of the Securities Exchange Act Amounts to $68.1 billion in 1Q 2019

April 10, 2019

Aggregate exposure of U.S. public corporations to securities class action lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act was $68.1 billion during the first quarter of 2019.