September 24, 2021

Volume XI, Number 267

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Market Capitalization Losses for Federal and State Filings: An Excerpt from Securities Class Action Filings—2021 Midyear Assessment

Securities Class Action Filings—2021 Midyear Assessment

Executive Summary

Overall filing activity dropped considerably in the first half of 2021, falling to 112 filings from 150 filings in the second half of 2020. This decline was largely driven by a substantial reduction in the number of M&A class actions and federal and state 1933 Act filings, although core filings with Section 10(b) allegations were also down modestly.

Filings in the first half of 2021 were generally smaller, resulting in lower MDL and DDL indices. DDL fell 50% from $162 billion in 2020 H2 to $80 billion in 2021 H1. Similarly, MDL fell 64% from $991 billion in 2020 H2 to $361 billion in 2021 H1.

Special purpose acquisition company (SPAC) IPOs have continued to explode. Filings against SPAC-related entities increased sharply in the first half of 2021. There were also 10 filings related to COVID-19, largely concentrated in the first four months of the year.

Disclosure Dollar Loss Index® (DDL Index®)

This index measures the aggregate annual 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. See the Glossary for additional discussion on market capitalization losses and DDL.

After a sharp increase in 2020 H2, the DDL Index declined to its lowest semiannual level since 2017 H2, down 54% from its high in 2019 H1.

This index measures the aggregate annual MDL for all federal and state filings. 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. See the Glossary for additional discussion on market capitalization losses and MDL.

See Appendix 1 for MDL totals and averages from 1997 H1 to 2021 H1.

Copyright ©2021 Cornerstone ResearchNational Law Review, Volume XI, Number 210
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About this Author

Alexander “Sasha” Aganin, Complex financial issues, securities, bankruptcy, Cornerstone Research
Senior Vice President

Sasha Aganin heads Cornerstone Research’s financial institutions practice. Dr. Aganin specializes in addressing complex financial issues arising in litigation. He has worked extensively to lead the firm’s efforts in securities matters and bankruptcy disputes. In addition, he has contributed significantly in other areas involving financial institutions, such as antitrust matters related to financial markets and institutions. Many of his cases involve risk analysis and modeling. Dr. Aganin has assessed economic losses, loss causation, and valuation for companies and...

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