Federal class action securities fraud filings hit a record pace in the first half of 2017. Over the past six months, plaintiffs initiated 226 securities fraud class actions in federal court, more than in any equivalent period since enactment of the Private Securities Litigation Reform Act of 1995 (PSLRA).

According to Securities Class Action Filings—2017 Midyear Assessment, a new report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, the 226 filings were 135 percent higher than the historical semiannual average of 96 filings between 1997 and 2016.

If the litigation rate of traditional securities class actions in the second half of 2017 equals that of the first half, the annual rate will nearly double the historical average.

“The record-setting pace of securities fraud litigation in equity market trading is causing record-setting head scratching among many analysts,” according to Professor Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse. “Part of the spike is clearly attributable to the migration of merger claims from state to federal court by plaintiffs looking to avoid the experienced, skeptical judiciary in Delaware. But another part of the spike seems attributable to a decline in the quality of complaints filed by attorneys who have recalibrated their business strategies to pursue a portfolio of cases with more remote payoffs because the costs of building such a portfolio remains low.”