Record Increase in 2016 US Securities Class Action Filings Driven by Merger-Objection Cases; NERA Economic Consulting Releases Annual Securities Class Action Trends Report

23 January 2017

New York—Three hundred securities class actions were filed in US federal courts in 2016, a 32% increase over 2015 and the highest number of filings of any year since the aftermath of the 2000 dot-com crash, according to “Recent Trends in Securities Class Action Litigation: 2016 Full-Year Review,” an annual report released by NERA Economic Consulting.

“The record number of securities class action cases in 2016 was largely driven by merger-objection cases, with 88 such filings,” said NERA Managing Director Dr. David Tabak. “Federal merger-objection cases, which allege a breach of fiduciary duty by directors and officers, grew at the fastest rate since 2010. However, this recent growth is more likely due to state court decisions limiting ‘disclosure only’ settlements, rather than due to increased M&A activity. Plaintiffs have begun to shift merger-objection cases to venues outside of Delaware, though the full extent of this trend remains to be seen.”

A total of 113 securities class actions settled in 2016, the highest number observed since 2011, and a near-record 149 cases were dismissed. For the first time since the passage of the Private Securities Litigation Reform Act (PSLRA), more cases were dismissed than settled.

The average settlement amount increased substantially for the second straight year, reaching $72 million in 2016, up by more than 35% compared to the 2015 figure. However, excluding outlier cases that settled for more than $1 billion, the average settlement amount decreased to $43 million from $53 million in 2015. The 2016 median settlement amount, which is more robust to the effects of outliers, increased by more than a fifth from the 2015 median amount of $7.4 million to $9.1 million.

Additional Key Trends

  • Section 11 allegations accounted for 20 filings in 2016, which is approximately equal to the average rate since 2010, but 23% lower than the rate of such filings in 2015.
  • Filings continued to be concentrated in the Second and Ninth Circuits—with 87 case filings in the Ninth Circuit (a 20% increase) and an all-time high of 72 filings in the Second Circuit. Third Circuit filings reached 34, up from 21 in 2012. In the Fifth Circuit, 17 class actions were filed, the fewest in four years.
  • The 300 federal securities class action suits filed in 2016 involved approximately 5.2% of US publicly traded companies. The average probability of a firm being targeted by a “standard” securities class action (e.g., Rule 10b-5, Section 11, and/or Section 12) was 3.4% in 2016, only slightly higher than the average probability of 3.0% between 2000 and 2002.
  • 28% of the total securities class action cases filed in 2016 (85 cases) were brought against firms in the Health Technology and Services sector, almost double that of 2015. Finance Sector filings made up 16% of total filings.
  • In 94% of securities class action filed in 2000-2016, a motion to dismiss was filed. Only 15% of securities class actions filed during this period reached a decision on a motion for class certification.
  • 674 securities class actions are pending in the federal system, a decrease from the high of 717 in 2005.

NERA Securities Class Action Trends Report Series

NERA has been analyzing trends in securities class actions for more than 25 years. This year-end study, Recent Trends in Securities Class Action Litigation: 2016 Full-Year Review, is co-authored by NERA Senior Consultants Stefan Boettrich and Svetlana Starykh, with contributions from Dr. David Tabak. In addition to NERA’s US report, the firm produces annual reports on securities class action litigation in Canada and on UK regulatory enforcement actions.

To download the report, visit:

About NERA

NERA Economic Consulting ( is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For more than six decades, we have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world’s leading law firms and corporations. We bring academic rigor, objectivity, and real-world industry experience to issues arising from competition, regulation, public policy, strategy, finance, and litigation.

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