DEFENDING EVENT-DRIVEN SECURITIES LITIGATION
CD: Reflecting on the last 12 months or so, could you provide an overview of the key trends and developments in event-driven securities litigation? To what extent has there been an uptick in activity?
Cooper: The event-driven securities litigation trend has continued over the last 12 months. For securities class actions overall, filings remained historically high through the end of 2019. Many expected that the coronavirus (COVID-19) pandemic would spur a new wave of event-driven securities cases in 2020, but that did not really happen. Securities class action filings of all types for the first half of 2020 declined by almost 20 percent. However, many of the COVID-19 related securities cases we saw filed in 2020 did fit squarely within the category of event-driven securities cases. There were just not as many filed as some predicted. We do not think the event-driven securities case is itself completely novel. While a greater focus in the past was placed on financial fraud and narrower challenges to the accuracy of a company’s financial statements, arising, for example, because of accounting issues or from a restatement, cases arising out of other company crises did get filed from time to time. A good example from over 10 years ago is the securities class action litigation brought against BP arising out of the Deepwater Horizon explosion in the Gulf of Mexico in April 2010. What has been more notable about the last few years is the greater volume of these event-based cases, and the consistent shift in how the plaintiffs’ bar is pleading these matters. This change has been a key driver in the significant increase in securities class action filings over the past few years.
Jan-Mar 2021 issue
Cleary Gottlieb Steen & Hamilton LLP
Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates