Non-U.S. Issuers Targeted in Securities Class Action Lawsuits Filed in the United States - 2019 Summary

March 11, 2020

The year 2019 saw an uptick in the number of securities class actions filed against non-U.S. issuers, and substantive trends emerged in the types of cases filed.

Dechert report on non-U.S. issuers targeted in securities class action lawsuits

— Six of the non-U.S. issuers against whom securities class actions were filed in 2019 are alleged to have misrepresented the prospects of approval by the U.S. Food and Drug Administration (FDA) and/or compliance with FDA rules and regulations.

— Three of the non-U.S. issuers are alleged to have failed to disclose alleged violations of Chinese government regulations.

— Three of the securities class actions filed against non-U.S. issuers related to alleged bribery schemes.

— Seven of the non-U.S. issuers are alleged to have failed to disclose conflicts of interest that were purportedly relevant to investors.

— Plaintiffs filed a total of 64 securities class action lawsuits against non-U.S. issuers in 2019, compared with 54 in 2018, which our previous report on non-U.S. issuers revealed. The 64 from 2019 accounted for just over 15 percent of the total 404 securities class action lawsuits that year.

 

Non-U.S. Issuers by Location of Headquarters and/or Principal Place of Business

Circuit courts where securities class action lawsuits were filed against non-U.S. issuers in 2018

Of the 64 non-U.S. issuers against whom securities class action complaints were filed in 2019, 18 have corporate headquarters and/or principal places of business in China. Of these 18 companies, 15 are incorporated in the Cayman Islands.

Twelve of the non-U.S. issuers have corporate headquarters and/or principal places of business in the United Kingdom. Nine have corporate headquarters and/or principal places of business in Canada.

With the legalization of recreational marijuana in Canada, six of the Canadian companies against whom securities class actions were brought in 2019 were cannabis-related companies.

Non-U.S. Issuers by Market Capitalization

The market capitalization of the non-U.S. issuers at the time at which the securities class actions were filed largely consisted of both smaller market cap companies (16 of 64) under US$250 million and larger market cap companies (20 of 64) over US$5 billion.

Non-U.S. Issuers by Industry

Other/unknown industries accounted for 35 class action lawsuits filed in 2019 against non-U.S. issuers, followed by the biotechnology and drugs industry, which accounted for 18 such lawsuits filed.