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Bank failures class action lawsuits overview:
- Who: Cornerstone Research released its 2023 Midyear Assessment for securities class action filings last week.
- Why: The report revealed that more securities class action filings have been filed by bank investors in the first half of 2023 than in all of 2022 combined.
- Where: Nationwide.
More securities class action filings have been made by bank investors in the first half of this year than all of 2022 combined — amidst a number of bank failures — according to a report released last week by Cornerstone Research.
The increase in securities class actions has been attributed partly to instability in the financial industry caused by a series of bank failures that occurred in rapid succession, beginning with FTX-tied Silvergate Bank in March.
In total, securities complaints filed against banks has eclipsed the historic semiannual average of 15, according to Cornerstone, which has been keeping track of securities class action lawsuit data since 1997.
While the total number of securities class actions filed this year — 114 — is higher than the previous semi annual total of 93, the amount is actually “considerably below” the semiannual number of filings made between 2016 and 2020, according to the report.
“While filing counts rose by 23%, average filing size grew as well, leading to increases of (maximum dollar loss) by 152% (the highest semiannual total recorded) and (disclosure dollar loss) by 45%,” the Cornerstone report states.
Cryptocurrency tops category for most filings in first half of 2023
Cryptocurrency was the trend category with the most filings in the first half of 2023, meanwhile, with the amount almost on pace to match a record high amount that was set last year, according to the report.
“Filings against defendants that allegedly owned, operated, or controlled cryptocurrency exchanges represented six of the 11 cryptocurrency-related filings,” the Cornerstone report states.
Trailing cryptocurrency are seven filings against special purpose acquisition companies (SPAC) and six related to COVID-19. The total number of SPAC and COVID-19 filings are both on pace to be lower than in 2022.
In March, the U.S. Treasury Department, Federal Deposit Insurance Corp., and the Federal Reserve said they were taking steps to protect the abilities of the U.S. banking system in the wake of Signature Bank and Silicon Valley Bank failing.
Have you been involved in a securities class action already this year? Let us know in the comments!
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