The first six months of 2017 saw record securities class action filings in federal courts. A total of 131 were filed in the first half of the year, writes the Wall Street Journal using data from Cornerstone Research.
At this pace, 9.5% of U.S. exchange-listed companies will face a securities lawsuit in 2017. That is the highest rate since 1997 and is up from 5.6% last year.
According to the Journal, experts attribute the rise to “enterprising plaintiffs’ firms bringing more, arguably weaker cases under the perceived strategy that companies will settle early to make a case go away.” A co-managing partner for Pomerantz LLP, a plaintiff-side securities firm that Cornerstone labeled as an “emerging” firm in the space, acknowledged the changing strategies and “new market” for pursuing securities cases. The Journal noted “he call[ed] it a necessary adaptation as the more obvious accounting misstatements have become scarcer.”