Last year saw highs and lows in the securities class actions arena. The number of class actions filed in federal court remained steady at 221, while the number (94) and median size ($6.5M) of settlements decreased, according to a NERA Economic Consulting report. Despite the decrease in number and size, there were fewer dismissals of cases, indicating that the overall merits of filed cases were stronger.

There’s no need to panic — securities class actions aren’t disappearing anytime soon, despite what some corporations may hope. Class actions tend to be cyclical in nature and are generally a reflection of the market as a whole. When the market crashes and stock prices fall, investors look for recourse to cover losses. This correlation is exemplified by the large influx of credit crisis-related cases we saw several years ago. When the market is up, like the surge we saw in 2014, there tends to be fewer class action settlements. This is illustrated by an uptick in filings against energy companies in the fourth quarter, coinciding with a slump in oil and gas prices.

One high point involved the Supreme Court, which had quite a busy year hearing arguments in several cases involving securities class actions. Most notably was its decision in Halliburton v. Erica P. John Fund (“Halliburton II”) at the end of June, related to the presumption of reliance at class certification for actions alleging violation of section 10(b) of the Securities Exchange Act. As a result of the decision, the number of 10b-5 filings increased 14%.

Read this article from the Wall Street Journal for more information.

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