News & Events

News & Events

11.2.2016

A Perfect Storm of Securities Class Actions on the Horizon

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Doug Greene authored an October 31 Law360 article titled “A Perfect Storm of Securities Class Actions on the Horizon.” In the article, Greene discusses the history of securities litigation and the waves of cases we’ve seen in the past. He also addresses what’s to come — a storm of securities class actions caused by a convergence of factors: an increasing number of U.S. Securities and Exchange Commission whistleblower tips, a drumbeat for more aggressive securities regulation, a stock market poised for a drop and an expanded group of plaintiffs firms that initiate securities class actions.

I believe that the convergence of these factors, as well as the predicted drop in the stock market, will significantly increase the number of securities class actions. Indeed, the next big wave in securities litigation may well not be a type of case caused by a unique event, such as options backdating, but instead a perfect storm of cases caused by a competitive blitz by plaintiffs firms, as companies report bad earnings results due to the economy and the stock market declining, and as whistleblower bounties and other SEC enforcement tools unearth disclosure problems. And throw in other lawsuit drivers, such as short-seller hit pieces, and we could see an unprecedented storm of securities class actions.