Securities Class Action Filings 2023 Year in Review: Key Trends in Federal and State Filings

Cornerstone Research

This is an excerpt from Securities Class Action Settlements—2023 Review and Analysis.

In 2023, MDL was the second highest on record while DDL decreased by 46%. The combined number of federal Section 11 and state 1933 Act filings fell to the lowest level in the last 10 years. The share of core federal filings related to SPACs, COVID-19, and cryptocurrency fell to less than 20% in 2023, and the 2023 Banking Turbulence trend category emerged.

Section 11 and M&A Filings

  • The number of class action filings increased slightly despite a large decline in federal Section 11 and state 1933 Act filings.
  • The number of state court–only filings (two) was the lowest number since 2014.
  • Core federal filings without Section 11 allegations increased 26% to 190 in 2023 from 151 in 2022, while federal M&A filings (six) remained low.

Mega Filings

  • There were 44 mega MDL filings in 2023 with a total mega MDL of $2.9 trillion, a 30% increase from $2.2 trillion in 2022 and the second-highest value on record.
  • There were 16 mega DDL filings in 2023, down from 18 in 2022. Total mega DDL decreased 60% from $529 billion to $211 billion, nearly returning to 2021 levels.

Core SPAC Filings

  • Core SPAC filings fell by 39%, from 28 in 2022 to 17 in 2023—about half of the peak of 33 filings in 2021.
  • From 2019 to 2022, 35% of core SPAC filings were resolved, just over half of the resolution rate for all other core federal filings.

Cryptocurrency-Related Filings

  • Cryptocurrency-related filings fell by 39% from the peak in 2022. Eleven of the 14 cryptocurrency-related filings in 2023 were filed in 2023 H1.
  • Filings involving allegations against an exchange accounted for seven of the 14 (50%) total cryptocurrency-related filings in 2023.

Trend Filings

  • Nine securities class actions related to the 2023 Banking Turbulence were filed (one in 2022 H2 and eight in 2023), representing a new emerging trend category.
  • COVID-19-related filings fell by 50% from the peak of 20 filings in 2022 to 10 filings in 2023, the lowest yearly total since the pandemic began in 2020.

By Industry

  • Total DDL in the Communications sector decreased eightfold from the record high in 2022.
  • The number of filings in the Financial sector more than doubled relative to that in 2022, accounting for 12% of filings in 2023, driven in part by the turbulence in the banking industry in early 2023.

By Circuit

  • Core federal filings in the Second Circuit declined for the second consecutive year, falling to 50 in 2023, below the 1997–2022 annual average of 56.
  • The Ninth Circuit made up 32% of all core federal filings in 2023, while accounting for 56% of total federal MDL.

U.S. Issuers

  • The percentage of U.S. exchange-listed companies subject to filings increased slightly to 3.3%, but is still the second lowest since 2012 and below the 1997–2022 annual average of 3.9%. Similarly, the percentage of these companies subject to core filings in 2023 decreased to its second-lowest point in the last 10 years (3.2%).
  • The likelihood of an S&P 500 company being the subject of a core federal filing nearly doubled year-over-year to 7.1%.

The views expressed herein are solely those of the authors and do not necessarily represent the views of Cornerstone Research.

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