Key Trends in Class Certification Decisions That Will Impact Proceedings
Securities Class Actions
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February 20, 2025
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Class certification in securities class actions has become a critical step because many cases settle soon after the class is certified. At the class certification stage, the plaintiffs must prove their class claims meet the legal standards. Because arguments for and against class certification are often based on court precedents, understanding how courts respond to such arguments can help improve the chances for success in future cases.
A review of court decisions in class certification cases over the course of 2024 reveals that defendants used price impact in 13 out of 15 arguments in cases involving Rule 10b-5 of the Exchange Act. In six of those cases, courts agreed or partially agreed, either by shortening the class period or denying certification. Defendants also used novel market efficiency arguments based on securities exhibiting “meme stock” characteristics in two 10b-5 matters, with mixed results.
In two of the three Section 11 matters examined, defendants challenged the traceability of the shares purchased in the aftermarket, contesting that shares could be shown to be issued pursuant to the registration statement at issue. In one case the court left this issue to be argued at the merits stage, while in the other the court limited the class accordingly.
In this article, the authors examine class certification decisions in 2024 and provide expert analysis of court precedent trends and details about each case. By examining these decisions, both defendants and plaintiffs can leverage legal precedents to mount more effective challenges to the opposing side’s claims. As additional decisions are made in 2025, both sides will need to incorporate evolving trends in adapting their strategies.
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February 20, 2025
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