Press Release March 08, 2019

Goodwin Releases Inaugural Report Analyzing Securities Class Action Lawsuits Against Technology Companies

Report Also Highlights Significant Developments in the Blockchain and Digital Currency Space

Global 50 law firm Goodwin announced today the release of its 2018 Year in Review – Securities Litigation Against Technology Companies report. By analyzing key decisions made in cases brought to both the Ninth Circuit and the California Federal Courts in 2018, the report highlights key trends that Goodwin believes will have a significant impact on class actions against technology and communications companies. The report also provides an update on new legal developments related to blockchain and digital currency companies.

Produced by Goodwin’s Securities Litigation and White Collar Defense and Digital Currency + Blockchain Technology practices, this year’s report notes that the number of new federal securities class actions filed in 2018 against publicly traded companies in the technology and communications sectors increased by 56% from 2017. The report also found that the likelihood of an S&P 500 company being targeted with a new securities class action rose to the highest level since 2002.

The overall increase in filings can largely be attributed to cases filed by shareholders seeking to recover investment losses after a company’s stock price drops following corporate disclosures, including earnings results, future growth prospects and revenue projections, and adjustments to guidance, among several others. Additionally, plaintiffs have likely focused on technology and communications companies in recent years due to the number of companies in the sector and the potential volatility of their stock prices.

“Last year, we saw several significant cases throughout the Ninth Circuit and California district courts that illustrate the increased focus on companies operating in these sectors,” said Michael Jones, a Partner in Goodwin’s Securities Litigation and White Collar Defense Group and a co-author of the report. “We created this report to help technology companies understand common operational and disclosure risks so that they can chart the best course through an unpredictable legal landscape.”

The report also notes that in the blockchain and digital currency space, technology companies have conducted approximately 1500 token sales, or ICOs, raising more than $26 billion in total. And in 2018, class action filings related to ICOs or cryptocurrency nearly doubled as the federal government has remained active in monitoring token sales to determine whether they involve potential violations of the federal securities laws.

“Courts have begun to take on the issue of whether and how federal laws govern ICOs,” said Grant Fondo, a Partner at Goodwin, founder and Co-Chair of its Digital Currency + Blockchain Technology practice and also a co-author of the report. “Because there is  such a significant amount of activity in the blockchain and digital currency space, we wanted to provide a report to help our clients interpret the shifting landscape and the complexities of the laws that have been applied in this space.”

To view the full analysis, download the report here.