Lawsuits related to SPACs and cryptocurrency on pace to exceed 2021 totals.

Menlo Park, Calif.—Plaintiffs filed 110 new securities class action lawsuits in federal and state courts in the first half of 2022. This total was in line with the 107 cases filed in the second half of 2021, according to a report released today by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse.

The report, Securities Class Action Filings—2022 Midyear Assessment, found that cases concerning special purpose acquisition companies continued to be the dominant trend. The 18 SPAC filings in the first half of 2022 are on pace to exceed 2021’s all-time high of 33.

“Despite the rate of SPAC mergers slowing dramatically due to increased regulation by the Securities and Exchange Commission, the number of filings related to SPACs remains elevated,” said Alexander “Sasha” Aganin, a report coauthor and Cornerstone Research senior vice president. “Notably, federal SPAC filings with Section 11 allegations in initial complaints have reappeared for the first time since the second half of 2019.”

Despite the rate of SPAC mergers slowing dramatically due to increased regulation by the Securities and Exchange Commission, the number of filings related to SPACs remains elevated.

While filing activity did not rise significantly, Maximum Dollar Loss and Disclosure Dollar Loss—measures related to dollar-value changes in companies’ market capitalization—sharply increased to near and above historic highs of $1.57 trillion and $482 billion, respectively.

Additionally, the number of mega DDL filings (those with DDL of $5 billion or more) increased substantially, with 12 filings already in the first half of 2022, compared to 13 in all of 2021. Similarly, total DDL from mega filings has already increased by $251 billion (139%) from 2021. There have been 18 mega MDL filings (those with MDL of $10 billion or more) so far in 2022, compared to 24 total in 2021.

There were 37 core federal filings (those excluding M&A claims) in the Second Circuit during the first half of 2022, down from 41 in the second half of 2021 but still well above the 1997–2021 semiannual average of 27. The Ninth Circuit saw 31 core filings during 2022 H1, up from 29 in 2021 H2 and above the semiannual average of 25. These Ninth Circuit filings included the five largest filings by MDL and the four largest filings by DDL in 2022 H1 (which made up 67% and 74% of total core federal MDL and DDL, respectively).

Cryptocurrency-related filings are on pace to reach an all-time high, as crypto-related lawsuits in the first half of 2022 were filed against an increasingly diverse pool of defendant types.

“Crypto is the hot growth sector in securities litigation, and will be generating high-stakes complex questions for years to come,” observed Joseph A. Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse, and a former SEC commissioner. “Plaintiffs will want to expand the domain of crypto instruments that are categorized as securities, and expand the geographic reach of U.S. securities law to recover from parties domiciled outside the U.S. Billions of dollars in real money, not Dogecoin, will be at stake, and securities law is currently unsettled as it might apply to many crypto assets.”

Key Trends

• Federal-only Section 11 filings: In the first half of 2022, federal-only Section 11 filings accounted for 73% of total federal Section 11 and state 1933 Act filings, the highest share since the second half of 2014.

• U.S. exchange-listed companies: Of U.S. exchange-listed companies, only 1.6% were the subject of a core filing in the first half of 2022, largely because of a 21% increase in the number of exchange-listed firms since early 2021. If this trend continues, this would be the lowest core litigation exposure per issuer since 2013.

• Non-U.S. companies: The number of core federal filings against non-U.S. issuers in the first half of 2022 (18) is on track to be significantly less than half of 2020’s record high of 74.

• Industries: The Consumer Non-Cyclical sector (which includes healthcare, pharmaceutical, and biotechnology companies, among others) continued to be the most common sector with 35 core filings during 2022 H1, down slightly from 39 in 2021 H2. Financial sector core filings continued to decline in the first half of 2022.