This week the first securities litigations to spring from the coronavirus crisis have arrived. It's of course expected that an event that has a negative impact on a stock price might soon produce a securities litigation. In recent years, nearly 10% of publicly traded companies are the targets of securities class action complaints each year. Even still, it feels surprising that this specific crisis, which now touches the entire world, might be the basis of new wave of securities litigations.
Kevin LaCroix, author of the blog dandodiary.com and a leading commentator on securities litigations and other D&O matters, wrote in his post about the Norwegian Cruise litigation
that "several people suggested to me that I was being alarmist and expressed deep skepticism about the possibility of coronavirus-related claims."
Clearly, those people are not as familiar with the securities litigation world as Mr. LaCroix.
Many might call these litigations opportunisitc, or worse, but the plaintiffs bar might respond that securities class actions hold corporations accountable for harmful behavior. Victory has a thousand fathers, John F. Kennedy once noted, but failure is an orphan. Perhaps securities class actions can help determine parentage.
Late last week, plaintiff firm Block & Leviton filed a complaint against Norwegian Cruise Line Holdings for making "blatantly false statements about COVID-19 to entice customers to purchase cruises, thus endangering the lives of both their customers and crew members... as a result, defendants’ statements regarding Norwegian’s business and operations were materially false and misleading and/or lacked a reasonable basis at all relevant times."
This week, Block & Leviton filed a complaint against Inovio Pharmaceuticals for making "misleading statements about the company’s development of a purported vaccine for the novel coronavirus, artificially inflating the company’s share price and resulting in significant investor losses."
Chicago Clearing will be tracking these cases, as well as all other litigations which will certainly emerge as the COVID-19 crisis unfolds.