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January 23, 2019

Columbia Law Professor: Public Company’s Chances of Being Sued at 12-Year High

Columbia Law professor John Coffee Jr. said in the New York Law Journal the chances that a publicly traded company is hit with a securities class action lawsuit is at its highest since 2006 and more than triple the average litigation rate from 1996 to 2016.

Professor Coffee says that, using the number of class action flings and the number of publicly traded companies in 2018, 8.77 percent of companies were sued in securities class actions last year. That litigation rate broke the previous record of 8.4 percent from 2017. A large share of this jump can be attributed to merger and acquisition lawsuits, which represents nearly half of the 403 securities lawsuits filed last year.

Unless reforms are enacted, Professor Coffee said we may soon see “something like 95 percent of all mergers will be challenged by non-meritorious suits that tax shareholders pointlessly.”

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