CD: How would you summarise recent trends and developments to have emerged in securities litigation?

Fernandez Johnson: One significant trend worth noting is the increase in merger-objection securities cases filed in federal court. These cases have been the province of state courts historically, most notably the Delaware Court of Chancery, but are now migrating to federal court after the Chancery Court’s decision in Trulia Inc. Stockholders Litigation. In Trulia, the Chancery Court made clear that it would not award significant attorney’s fees where there was a ‘disclosure only’ settlement. It remains to be seen what tools federal courts will develop to curtail these merger-objection suits. Another significant trend is the filing of ‘event driven’ securities cases. These are cases filed after disclosure of a negative event not tied to the company’s financial statements, for example a stock declines after announcements following a Department of Justice (DOJ), Securities and Exchange Commission (SEC) or other regulatory investigation, an environmental incident or even a cyber security issue. The uptick in securities fraud claims stemming from data breaches seems likely to emerge as a trend in the face of a continued focus on cyber issues, including by regulators concerned about personal data privacy and security.

Jul-Sep 2019 issue

Debevoise & Plimpton LLP