Accounting Class Action Filings and Settlements-2021 Review and Analysis

Federal securities class motion filings involving SPACs grew to become the dominant submitting pattern in 2021.

Los Angeles—Securities class motion filings and settlements with accounting allegations fell in 2021—each when it comes to numbers and as percentages of whole securities class actions. Settlement {dollars} and defendant market capitalization losses in case filings additionally dropped to low ranges, in keeping with a report launched at this time by Cornerstone Analysis.

Accounting Case Filings

The report, Accounting Class Action Filings and Settlements—2021 Review and Analysis, discovered that plaintiffs filed 46 securities class actions with accounting allegations (accounting case filings), the second-lowest stage within the final 10 years and down from 70 filings in 2020. Accounting case filings made up 24% of all federal securities class motion filings in 2021, in comparison with 31% in 2020.

SPAC filings that embody accounting allegations tripled in 2021 as in comparison with the prior yr.

Filings involving particular function acquisition corporations (SPACs) was one space of focus that grew. Roughly 20% of accounting case filings in 2021 concerned a SPAC, and within the second half of the yr that determine was practically one in three.

Filings referencing monetary assertion restatements and/or allegations of inner management weaknesses declined to the bottom stage in additional than 10 years.

Accounting Case Settlements

There have been 33 settlements that concerned accounting allegations (accounting case settlements) in 2021, down from 38 settlements within the earlier yr. The proportion of accounting case settlements fell to 38% of all securities class actions settled in 2021, in comparison with 49% in 2020.

The full worth of securities class motion settlements with accounting allegations dropped sharply from $3.7 billion in 2020 to $755 million in 2021. The median settlement worth for accounting circumstances was $7.5 million, down from a median settlement worth of $11.3 million in 2020 (adjusted for inflation), regardless of a rise within the dimension of issuer agency defendants.

Learn the report: Accounting Class Action Filings and Settlements—2021 Review and Analysis

Sally Bai additionally contributed to this report.

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