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Securities Class Action Filings Involving Technology Companies Are on the Rise

Tech company settlements decline sharply after peaking in 2018.

San Francisco–Securities class action filings involving technology companies rose by more than 50% in 2019, the fourth annual increase in a row, according to a new Cornerstone Research report.

The report, Tech Company Securities Class Action Filings and Settlements—2015–Q1 2020 Review and Analysis, found that the number of filings against tech companies increased to a record 85 new cases in 2019 from 55 the year before. Companies in the Internet and Software subsectors were targeted in 66% of 2019 cases.

Tech company cases in both federal and state courts have boomed over the last four years, accounting for 20% of total securities class action filings. Similar to overall filings activity, tech company filings saw a shift from federal to state courts, after the U.S. Supreme Court’s 2018 ruling that state courts have jurisdiction over 1933 Act claims.

The first quarter of 2020 saw a decline in tech company cases, likely due in part to slowdowns associated with the COVID-19 pandemic.

The number of tech company settlements has been volatile in recent years, declining to its lowest level in 2019, after peaking in 2018. For the first time in the last five years, however, the median settlement amount for tech company cases ($17 million) exceeded the median for non-tech company settlements ($11 million) in 2019.


  • Dollar Disclosure Loss: The aggregate Dollar Disclosure Loss (DDL) of tech company filings rose to $161 billion in 2019, up 27% from $127 billion in 2018. 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.
  • Maximum Dollar Loss: The aggregate Maximum Dollar Loss (MDL) of tech company filings more than doubled in 2019 to $614 billion from $282 billion in 2018. 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.
  • Mega Filings: There were four mega DDL filings and eight mega MDL filings involving tech companies in 2019. Mega DDL filings have a DDL of at least $5 billion, and mega MDL filings have an MDL of at least $10 billion.
  • Mega Filings Allegations: Between 2015 and Q1 2020, there were 26 mega filings against tech companies in federal and state courts. Allegations in these cases primarily relate to business prospect misrepresentations or the fallout from mergers and acquisitions.

About Tech Companies

“Tech companies” as used in this report refer to five subsectors under the Bloomberg Industry Classification Systems (BICS): (1) Computers, (2) Internet, (3) Semiconductors, (4) Software, and (5) Telecommunications. This report provides an in-depth look into the securities class action filings and settlements of tech companies. For more information on trends across industries, see Cornerstone Research’s latest Securities Class Action Filings and Securities Class Action Settlements reports.

Copyright ©2020 Cornerstone ResearchNational Law Review, Volume X, Number 197



About this Author

Ravi Sinha Securities and Financial Analyst Cornerstone
Vice President

Ravi Sinha has more than ten years of experience working with clients and experts to address complex financial and valuation issues. He has analyzed market efficiency, class certification, valuation, and aggregate damages across a variety of matters involving debt, equity, and derivative securities. Mr. Sinha has worked on a variety of merger and acquisition matters. He also has experience in valuing intangible assets such as patents and trademarks. Mr. Sinha is experienced in all phases of litigation, including deposition, mediation, and trial. He has managed large case teams and has...