The results are now in for 2018, and, in terms of securities class actions, it was another near-record year with a bumper crop of lawsuits. Some 403 federal securities class actions were filed in 2018, down slightly from 412 in 2017 (which was the highest year since 2001), but more than 200 percent above the average number for 1996 to 2016 (which was 193). (This data comes from Kevin M. LaCroix, “Securities Suit Filings Continued at Heightened Pace in 2018,” The D&O Diary, (Jan. 6, 2019) at pp 1-2.) Viewed together, 2017 and 2018 show a significant inflation in the rate of securities class action filings, particularly when one recognizes that the number of publicly listed companies has shrunk significantly (chiefly because of mergers and bankruptcies). If we use the 2017 year-end total number of U.S. publicly traded companies (4,411), the cases filed against publicly traded companies in 2018 (some 385) imply that 8.77 percent of all publicly traded companies were sued in securities class actions just in 2018—which litigation rate is the highest rate since 2006. This 8.77 percent rate is more than three times the average annual litigation rate over 1996-2016 (which was 2.9 percent). (Id. at p. 3. The litigation rate in 2017 was also a record at the time—8.4 percent.) As a result, public companies now face an over 1 in 12 chance this year of attracting a securities class action (if the 2018 rate persists).

More ominous still, the size of the alleged losses in securities litigation has also soared according to Cornerstone Research. Indeed, they find that the alleged losses in just the first half of 2018 were substantially greater than the alleged losses in all of 2017. (See Cornerstone Research, “Securities Class Action Filings—2018 Midyear Assessment” (2018). Loss in securities cases can be estimated in various ways, and I am here using Cornerstone’s data for the loss following the corrective disclosure (which came to $157 billion in the first half of 2018).) Although the size of the alleged losses does not necessarily determine the size of the settlement (if any), it does make it impossible to characterize securities class actions as merely “nuisance litigation” when a loss could bankrupt even a sizeable company.