During the first half of 2022, 101 new federal securities class action cases were filed. Assuming that the filing levels observed in the first six months of the year continue, annual filings for 2022 will be 202, which is in line with the number of cases filed in 2021 but more than 35% lower than the number of cases filed in 2020. In addition, if the first six months of 2022 are indicative of the full-year patterns, we expect to see fewer merger objections and an increase in Rule 10b-5, Section 11, and/or Section 12 cases relative to 2021.
New cases continue to be filed most frequently in the Second and Ninth Circuits, with more than 25 non-merger-objection cases in each jurisdiction during the first half of 2022. Of the cases filed in this time frame, over 30% have included an allegation related to misled future performance, the most common allegation for period. For the first time in the past five years, more than 25% of the new cases filed included an allegation related to merger integration issues, the majority of which are connected to SPAC-related acquisitions. During the first half of 2022, there were 19 SPAC-related securities class action suits filed, compared to the 27 such cases filed for full year 2021. COVID-19-related class actions have continued to be filed, with 13 new cases in the first six months of the year.
There were 114 cases resolved between January and June 2022, of which approximately half have been settled and half have been dismissed. If resolutions continue at this pace for the remainder of the year, 2022 resolutions will be the lowest recorded level since 2015. This decline is primarily driven by the persistence of the low level of merger-objection resolutions, which have declined from more than 125 in 2019 to a projected 22 for 2022.
The median NERA-defined Investor Losses for cases settled during the first half of 2022 was $1,137 million, the highest recorded value in the most recent 10 years. This median value is approximately 55% higher than the 2021 median Investor Losses of $731 million. The median ratio of settlement amount to Investor Losses declined modestly in 2022 to 1.7%, down from the 1.8% observed in 2020 and 2021.
For cases settled in 2022, the median settlement value was $13 million. This is an increase from the median inflation-adjusted value of $9 million in 2021, but still below the 2018–2020 inflation-adjusted median values of $14–$15 million.
We thank Consultant Jianghao Liu for his contributions and researchers in NERA’s Securities and Finance Practice for their valuable assistance. These individuals receive credit for improving this report; any errors and omissions are those of the authors.
