2022 Securities Litigation Year In Review

• Jurisdiction: United States,Federal
• Law Firm: Jones Day
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Class Actions, Trials & Appeals & Compensation, Securities
• Author: Mr Roman Darmer, Walter W. Davis, Geoffrey Ritts, Marjorie Duffy, Henry Klehm III, Michael J. McConnell, Adrienne Ferraro Mueller, John Tang and Nina Yadava
• Published date: 10 February 2023

INTRODUCTION

During 2022, the third year of the COVID-19 pandemic, securi ties class action cases fell for the fourth consecutive year, with 205 new cases filed this year compared with 210 cases filed in 2021.¹ The number of federal court securities suits filed in 2022 was 10% below the 1996-2020 annual average of 228.² The 2022 filings were nearly 53% below the 431 filings in 2018, the recent peak year for federal securities-suit filings.³

These numbers were impacted by the continuing decline in class action merger objection lawsuit filings. In 2022, only eight federal court merger objection class actions were filed com pared with 15 in 2021 and in sharp contrast with the 205 merger objection suits filed in 2017 alone.⁴ Plaintiffs continue to file merger objection lawsuits but are increasingly filing them as individual actions rather than class actions.⁵

As has been the case for the last 11 years, suits alleging Rule 10b-5 claims were the vast majority of all new case filings in 2022. Suits against defendants in the health technology and electronic technology services sector were the most common, with each accounting for 27% of total filed cases in 2022.⁶

Notably, securities lawsuits relating to special purpose acquisi tion companies ("SPACs"), COVID-19, and cryptocurrency and other digital assets totaled 51 cases last year, representing moreAs intermittent disruption of federal and state courthouses as a result of COVID-19 subsided, the number of settlements of securities cases rose substantially in 2022, with 104 approved class action settlements compared with 82 in 2021.⁷ Likewise, total settlement amounts more than doubled in 2022, increas ing to $4 billion from $1.9 billion.⁸ The average settlement value was $38 million, an increase of more than 70% over the $22 million average settlement in 2021.⁹ than 26% of all federal securities class action filings. We analyze noteworthy developments in each of those sectors in more detail below.

Settlements in 2022 included ¹⁰ mega-settlements in excess of $100 million, topped by the $809 million settlement in the Twitter case.10 The Twitter settlement ranks as the 19th larg est settlement since enactment of the Private Securities Litigation Reform Act ("PSLRA"). The 10 mega-settlements in 2022 constituted 7% of all settlements but 51% of total settlement amounts.¹¹ All of the cases on the 2022 top 10 list settled after years of litigation, and some, including Twitter, settled on the eve of trial.¹² Three of the top five settlements in 2022 involved non-U.S. companies: Teva Pharmaceutical ($420 million), Luckin Coffee ($175 million), and NovaStar Mortgage ($165 million). Nine of the top 10 settlements were in cases filed in federal courts. Five of the top 10 settlements occurred in the Southern District of New York or the Northern District of California.¹³ The only top 10 settlement resolved in a state court was the...