Topic: Securities Litigation
The statistics on securities class-action lawsuits for 2018 are in and, though some numbers will come as no surprise, there are some trends to watch for in 2019. According to the New York Law Journal, the total number of securities-related class-actions decreased slightly in 2018 from 2017. Still, the litigation rate remains high and therefore remains a cause for concern: public companies face a potential 1 in 12 chance of getting hit with a suit.
If you’re under investigation or predict legal action is on the horizon, it’s essential to retain a New York securities litigation attorney. Your interests and reputation are at stake, but there are strategies that you could implement to reduce your risks. For more information on being proactive on securities-related legal matters, contact Protass Law PLLC at (212) 455-0335 to schedule a free case consultation.
Securities Litigation Outlook for 2019
The past is truly prologue when it comes to securities-related lawsuits. Though the number of class-action cases dropped from 412 in 2017 to 403 in 2018, these figures must be viewed in the context of the bigger picture of the past two decades. From 1996 to 2016, the average number of securities class-action lawsuits was 193. The last two years have seen more than a 200 percent increase in litigation. And this has taken place during a period of time in which the number of publicly-traded companies has considerably decreased. In a word, there are more class-action lawsuits against a decreased pool of targets.
Lawsuits May Hit Certain Industries Harder
In addition to trends affecting all public companies in the U.S., corporate entities in some industries are more likely to find themselves embroiled in securities litigation, including:
- Life Sciences – Particularly for big pharma, the opioid crisis has made a major impact. Shareholder class-actions allege that manufacturers engaged in false or misleading statements, as well as questionable practices in the marketing of their products.
- Technology – These companies continue to be targeted for securities litigation based upon success – or disappointment – of product launches.
Types of Securities Litigation to Expect in 2019
The most alarming statistics over the last few years stem from class-action securities lawsuits, in which a single case is filed by a group of shareholders who claim to have suffered damages as a result of corporate mismanagement or misconduct. If successful, members of the class can recover losses they sustained over a specified period of time. Examples include:
Fraud includes using false statements to induce another person to take a particular action, which results in an unjust benefit for the individual who made the claims. In securities law, the scenario usually involves events that artificially impact upon share price, such as misstatements of material fact, omissions of material fact, accounting fraud and/or misconduct in short-sales or restricted stock sales.
Mergers and Acquisitions
Though these lawsuits don’t involve direct misconduct, some are the subject of merger objection securities litigation. Shareholders who are dissatisfied by the prospect of being acquired by another entity can sue to prevent the merger or acquisition from proceeding.
Shareholder Derivative Lawsuits
This type of securities case is filed by shareholders to restore the value of their investment, which may have been adversely affected by insufficient corporate governance or waste of assets. Shareholder derivative cases can be similar to securities fraud cases where the losses arise from false and misleading statements of material fact or omissions of material fact.
Reduce Your Risk by Consulting with a New York Securities Litigation Lawyer
The forecast for securities litigation in 2019 may seem grim, but you limit your vulnerability and exposure when you retain a knowledgeable attorney to advocate on your behalf. Harlan Protass has more than 20 years of experience representing companies of all sizes, helping them achieve positive outcomes in the face of complex litigation. Call Protass Law PLLC at (212) 455-0335, or reach out online to schedule a free consultation of your case.