The number of securities class action filings rose in the first half of 2023, an increase of 23% from the second half of 2022. These findings, released by Cornerstone Research and the Stanford Law Shool Securities Class Action Clearinghouse, noted that of the 114 class actions filed in federal and state courts, 11 were cryptocurrency-related and six involved the banking sector.
And, per co-author Alexander “Sasha” Aganin, the number of crypto-related filings will approach 2022’s record high-water mark. According to the report, crypto’s 11 filings thus far are trailed by seven SPAC class-action filings and six related to COVID-19.
Cornerstone Research compiles a Disclosure Dollar Loss Index (DDL) for all federal and state filings. DDL is the “dollar-value change in the defendant firm’s market capitalization between the trading day immediately preceding the end of the class period and the trading day immediately following the end of the class period.”
According to this computation, the DDL Index increased to $170 billion in the first half of this year, a 45% rise from the second half of 2022. The first half also marked the fourth consecutive 6-month period where the DDL has fallen above the historical average of $114 billion. The DDL Index reached a high-water mark of $505 billion in the first half of 2022.
Additionally, Cornerstone measures the aggregate annual maximum dollar loss for all federal and state filings. The Maximum Dollar Index (MDL) is the “dollar-value change in the defendant firm’s market capitalization from the trading day with the highest market capitalization during the class period to the trading day immediately following the end of the class period.” The first half of 2023 saw a 10-year high, at over $2 trillion.
This year’s first-half MDL is nearly the same total as all of 2022 ($2,552 billion) and more than four times the semi-annual average of $548B.
By industry, financial sector filings tripled in the first half of 2023 year over year, partly driven by banking turbulence.