Global Corporate Exposure to Rule 10b-5 Securities Class Actions Amounts to $42.7 billion in 3Q 2021

BETHESDA, Md., Oct. 8, 2021 /PRNewswire/ -- Global exposure of U.S.-listed companies and their directors and officers to stock-drop securities class action (SCA) lawsuits that allege violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, amounts to $42.7 billion in 3Q'21 – an increase of 13.3% relative to 2Q'21.

U.S. SCA Rule 10b-5 Exposure of U.S. issuers amounts to $38.7 billion in 3Q'21, an increase of 26.85% relative to 2Q'21. ADR SCA Rule 10b-5 Exposure of non-U.S. issuers that trade via American Depositary Receipts (ADRs) on U.S. exchanges amounts to $4.0 billion in 3Q'21, a material decrease of 43.98% relative to 2Q'21.

According to the SAR Securities Class Action Rule 10b-5 Exposure Report – 3Q 2021, the U.S. SCA Rule 10b-5 Exposure Rate of U.S. issuers increased by 2 basis points to 0.08% in 3Q'21. The U.S. SCA Rule 10b-5 Litigation Rate declined for the fourth consecutive quarter by 26 basis points to 0.55% in 3Q'21.

In 3Q'21 the ADR SCA Rule 10b-5 Exposure Rate of non-U.S. issuers decreased by one basis point to 0.01%. The ADR SCA Rule 10b-5 Litigation Rate increased by 5 basis points to 0.20%.

"During 3Q of 2021, the aggregate market cap of U.S.-listed companies reached $50 trillion – $20 trillion greater than prior to the COVID pandemic – while the Rule 10b-5 litigation rate declined to its lowest level since SAR began tracking this data," said Nessim Mezrahi, CEO of SAR.  

3Q 2021 Securities Class Action Landscape:

• 22 U.S. issuers were sued for alleged violations of Rule 10b-5. Based on allegations presented in the first-filed SCA complaint against each defendant corporation, U.S. SCA Rule 10b-5 Exposure amounts to $38.7 billion. Quarterly frequency exhibited a notable decline and exposure increased by 26.85% relative to 2Q'21.
• 6 U.S. large cap issuers were sued for alleged violations of Rule 10b-5. The Large Cap SCA Rule 10b-5 Exposure amounts to $33.3 billion, a material increase of 98.1% relative to 2Q'21. The Large Cap SCA Rule 10b-5 Exposure Rate increased by 3 basis points to 0.07%. The Large Cap SCA Rule 10b-5 Litigation Rate decreased to 0.51% from 0.64% in 2Q'21.
• 3 U.S. mid cap issuers were sued for alleged violations of Rule 10b-5. The Mid Cap SCA Rule 10b-5 Exposure amounts to $2.5 billion, a material decline of $6 billion, or 70% relative to 2Q'21. The Mid Cap SCA Rule 10b-5 Exposure Rate declined to 0.15% from 0.52% in 2Q'21. The Mid Cap SCA Rule 10b-5 Litigation Rate decreased by 42 basis points to 0.43% in 3Q'21.
• 13 U.S. small cap issuers were sued for alleged violations of Rule 10b-5. The Small Cap SCA Rule 10b-5 Exposure amounts to $2.8 billion, a decrease of $2.4 billion, or 46% relative to 2Q'21. The Small Cap SCA Rule 10b-5 Exposure Rate decreased by 32 basis points to 0.33% from 0.65% in 2Q'21. The Small Cap SCA Rule 10b-5 Litigation Rate decreased by 29 basis points to 0.61% relative to 2Q'21.
• 4 non-U.S. issuers that trade via ADRs in the U.S. public markets were sued for alleged violations of Rule 10b-5. The ADR SCA Rule 10b-5 Exposure decreased by $3.2 billion to $4 billion, or 44% relative to 2Q'21. The ADR SCA Rule 10b-5 Exposure Rate amounts to 0.01%, a decrease of just 1 basis point relative to 2Q'21. The ADR SCA Rule 10b-5 Litigation Rate increased to 0.20%, 5 basis points higher relative to 2Q'21.

Media Contact: Carolina M. Doherty, VP of Business Development, [email protected]

For more information, please visit: www.sarlit.com

SOURCE SAR

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