As COVID-19 exploded earlier this year, many wondered whether the pandemic—and associated stock market dislocation—would bring a tsunami of shareholder litigation, akin to what was seen in the wake of the global financial crisis. Although it is perhaps too early to fully predict, recent COVID-19 lawsuits show meaningful differences when compared to lawsuits arising from the financial crisis, particularly given the sudden emergence of the pandemic and the lack of a sustained stock market downturn to date.

According to data compiled by The Stanford Law School Securities Class Action Clearinghouse, federal securities class actions declined by 10% in the first half of this year when compared to the same period last year. This decrease stands in stark contrast to the 96% and 60% increases in the second half of 2007 and the first half of 2008, respectively, when compared to the same periods in the years prior. Some of this decline is certainly attributable to a pandemic-triggered decrease in public company M&A activity, as M&A proxy disclosure litigation has constituted a meaningful proportion of federal securities lawsuits in recent years. Even adjusting for a decline in those high-volume cases, however, there has not yet been a groundswell of pandemic-inspired securities class actions.