According to the latest annual report from NERA, and based on NERA’s inclusive counting methodology, the number of federal securities class action lawsuits was flat in 2024 relative to 2023, but the number of “traditional” securities class action suits increased in 2024 for the second year in a row. In addition, the number of case resolutions (including both settlements and dismissals), increased in 2024, reversing a six-year decline in the number of resolutions. NERA’s January 22, 2025 report entitled “Recent Trends in Securities Class Action Litigation: 2024 Full-Year Review,” can be found here.
In reading NERA’s annual report, it is important to understand the counting methodology used. While NERA’s report is intended to track federal court securities class action lawsuit filings, its tally includes not only lawsuits alleging violations of the federal securities laws but also includes lawsuits that “allege violations of common law, including breach of fiduciary duty, as with some merger-objection cases; still others are filed in federal court under foreign or state law.” In addition, NERA counts multiple cases based on the same allegations but based in different circuits as multiple filings, with the count adjusted later if the cases are subsequently consolidated. These aspects of NERA’s counting methodology are different from the counting methodologies used by other publicly available sources concerning the numbers of federal securities class action suit filings; the resulting tally will necessarily differ from other sources’ tallies as well.
According to the tally NERA used, there were a total of 229 federal court securities class action lawsuit filings, the same number as in 229. (It should be noted that while NERA employs an expansive counting methodology, its tally reflects only federal court lawsuits; it does not include state court securities class action lawsuits.) While NERA’s total count of all 2024 federal court securities suits is level with its count for 2023, the 2024 count is higher than the counts for both 2022 (206) and 2021 (212).
Perhaps more meaningful that NERA’s inclusive count of federal court suits overall is NERA’s count of “traditional” securities class action lawsuit filings. (That is, lawsuits alleging violations of Rule 10b-5 and/or Sections 11 or 12 of the Securities Act, and excluding merger objection lawsuits, unregistered crypto filings, and “other cases.”) According to this narrower tally, there were 214 “traditional” federal court securities class action lawsuit filings in 2024, compared to 205 in 2023, 178 in 2022, and 189 in 2021, and the highest annual number of traditional securities suit filings since 2019 (237).
The 2024 filings were concentrated in certain industrial sectors. Excluding merger-objection and crypto unregistered securities cases, the electronic technology and healthcare technology and services sector comprised 56% of new filings, up from 41% in 2023.
Data in Figure 1 of the report showing the annual number of filings and the annual number of public companies allows a litigation rate to be calculated. (That is, the number of securities class action lawsuits relative to the number of public companies.) The data as reflected in Figure 1 shows a litigation rate for 2024 of 4.19%, 4.01% for 2023, 3.38% for 2022, and 3.43% for 2021. In other words, using NERA’s inclusive tally for the number of lawsuits, the litigation rate in 2024 was the highest level in the four-year period 2021-2024. It should be noted that the litigation rate for 2020, in which the total number of securities suit filings was substantially inflated by the number of federal court securities class action lawsuit, the litigation rate was a whopping 6.2%. One reason that the litigation rate increased each year during the four-year period 2021 through 2024 is that the number of public companies declined each year during that period 2022-2024.
Among the more interesting observations in the report is its presentation showing a “notable decline” in the percentage of federal filings that target foreign companies. The report shows that while foreign companies represent 25.9% of all U.S.-listed companies, a ten-year high, lawsuits against foreign companies represented only 16.8% of filings in standard cases were against foreign companies, a ten-year low. The percentage of foreign companies listed on U.S. exchanges has in fact increased each year in the ten-year period from 2015-2024, but the percentage of all filings against foreign companies has declined every year since 2020, and during each year in the three-year period 2021-2024, the percentage of foreign U.S.-listed companies has exceeded the percentage of annual federal court securities suits against foreign companies.
The report includes detailed information regarding the number of cases involving theme-based filings. Thus, for example, the report shows that the number of crypt related filings has decreased in each of the last two years, from a high in 2022 of 29 filings to three-year low of 8 such filings in 2024 (the lowest number since 2019, when there were 6 crypto-related filings), The report presents the filing details for COVID-19-related filings, Artificial Intelligence filings, SPAC-related filings, Environment-related filings, Cybersecurity-related filings, Bribery-related filings, and Money Laundering-related filings.
The report notes that during the six-year period between 2017 and 2023, there was a decline in the number of federal securities class action lawsuit case resolutions. However, this six-year declining trend reversed in 2024, “which saw the number of case resolutions increase by 17% from 186 in 2023 to 217 in 2024.” Of the 2024 case resolutions, 93 involved settlements and 124 involved dismissals. The number of dismissals increased by 29% from 96 in 2023 to 124 in 2024.
The report also details the dismissal rate. Motions to dismiss are filed in 96% of cases filed between 2015 and 2024. During that period, courts reached a decision in 74% of the cases (in 19% of the cases, the plaintiff voluntarily withdraws the lawsuit; in 7%, the cases are settled before a ruling on the motions to dismiss; and in 1% of cases, the defendant withdraws the dismissal motion). Of the 74% of cases in which motions to dismiss were filed and in which the court reaches a decision, the motion was granted in with or without prejudice 61% of the time, the motions were partially granted 20% of the time, and denied in full 19% of the time.
As far as case settlements, the aggregate value of all securities class action settlements in 2024 was $3.8 billion, slightly below the inflation adjusted total of $4.0 billion in 2023. Excluding cases involving merger objections, crypto cases, and $0 settlements, around 42% of settlements had a recovery of less than $10 million, and another 40% had settlements between $10 million and $49.9 million. The top ten settlements in 2024 accounted for about 60% of the aggregate total for the year.
Excluding merger objection, crypto, and zero dollar settlements, the average settlement value in 2024 was $43 million, slightly below the inflation-adjusted value of $46 million in 2023. However if settlements of over $1 billion are excluded, the average settlement in 2024 of $43 million is substantially greater than the inflation-adjusted average $35 million in 2023. The median settlement value in 2024 was $14 million, roughly in line with the inflation-adjusted median settlement values for 2023 and 2022.
The aggregate total of plaintiffs’ attorneys’ fees in 2024 was $1.063 billion, compared with $974 million in 2023 and $1.076 billion in 2022. The 2024 aggregate total was substantially greater than the totals for each of the years 2017-2021. Plaintiffs’ attorneys’ fees and expenses comprised about 27.3% of the aggregate $3.8 billion settlement amount in 2024.