(Reuters) - The number of new federal lawsuits seeking class action status on behalf of investors seeking to recoup losses from stock drops or challenge mergers fell in May to their lowest level in four years, data released by Stanford University on Tuesday showed.
Stanford’s Securities Class Action Clearinghouse, which maintains a database on securities class action lawsuits, attributed some of the decline to a drop in corporate deals as a result of the economic catastrophe caused by COVID-19.
Only 16 proposed securities class actions were filed in May, down from 44 in April. The clearinghouse said it was the lowest monthly tally since April 2016, when only 12 new lawsuits were filed in federal court.
Of those 16, six targeted mergers and acquisitions, less than half of the 13 lawsuits that were being filed each month on average this year and in 2019.
Non-M&A lawsuits over stock drops and alleged frauds by publicly-traded companies fell to 10, compared to 21 such cases on average each month this year and 20 last year, the clearinghouse said.
In its report, the clearinghouse noted some lawsuits are now being filed related to COVID-19, such as a case in May accusing cruise line operator Carnival Corp of misleading investors about its adherence to its health and safety protocols.
It said it was unclear, though, “to what extent emerging trends like COVID-19 related cases will pick up the ‘slack’ and drive filings activity going forwards.”