Number of Accounting-Related Securities Class Action Filings and Settlements Remained Steady in 2024 as Size of Settlements Shrunk

Size of issuer defendants in filings and settlements declined sharply.

LOS ANGELES, April 16, 2025 /PRNewswire/ -- The number of accounting-related securities class action filings and settlements remained steady in 2024, with the number of filings increasing slightly and for the third consecutive year, according to a new report from Cornerstone Research. The report, Accounting Class Action Filings and Settlements—2024 Review and Analysis, also found that while the number of settlements remained the same as 2023, the total value of those settlements declined by 36% from the prior year.

Accounting Case Filings
The number of accounting-related securities class action filings rose to 57, up slightly from 56 filings in 2023, but remained below the 2015–2023 historical average of 61. As a percentage of total securities class action filings, accounting case filings (26%) were at their second-lowest level in the last 10 years.

While the number of accounting cases remained steady in 2024, they were filed against smaller issuer defendants. The median pre-disclosure market capitalization of issuer defendants fell to $445.6 million, the lowest in the past 10 years. In addition, the DDL Index (the dollar-value change in the defendant firm's market capitalization) of accounting cases declined 42% to $45.6 billion and was 17% lower than the 2015–2023 historical average of $54.8 billion.

During 2024, certain filing trends reversed. "For many years, revenue recognition had been the most common GAAP violation alleged in accounting-related securities class action filings," said Frank Mascari, a report coauthor and vice president at Cornerstone Research. "That changed in 2024 when, for the first time since tracking began, allegations related to asset valuations and/or impairments were the most common."

Additional Filing Trends:

• For the fourth consecutive year, the median pre-disclosure market capitalization of issuer defendants declined.
• Accounting cases filed in 2024 involving restatements declined by more than 30% from 2023, returning to historical levels.
• Since 2015, 32 issuers had at least two separate complaints that included accounting allegations filed against them.

Accounting Case Settlements
Although the number (35) of accounting-related securities class action settlements remained consistent with 2023, the total value associated with these settlements dropped substantially, from $1.6 billion in 2023 to $1.1 billion in 2024, the second-lowest level in the past 10 years. This was due, in part, to the fact that there was only a single mega settlement (i.e., greater than $100 million) in 2024 as compared to the historical average of four mega settlements per year.

During 2024, accounting case settlements involved smaller issuer defendants. The median pre-disclosure market capitalization of issuer defendants decreased by 39% in 2024 to $745.5 million. This decline is consistent with lower median and average settlement amounts, as issuer defendant size is a proxy for the resources available to fund the settlement. Specifically, the average settlement amount fell from $47 million to $30.1 million, while the median settlement amount dropped from $15.4 million to $12 million. 

Following a spike in 2023, the average time from filing to settlement for accounting cases fell by over seven months, returning to a level consistent with the average over the prior nine years.

"The single most important factor in explaining individual settlement amounts is 'plaintiff-style damages,' a proxy for the amount of potential investor losses that plaintiffs may claim in a securities class action," said Elaine Harwood, a report coauthor and senior vice president at Cornerstone Research. "The sharp decline in the size of accounting case settlements in 2024 can be explained, in large part, by the nearly 50% decline in the median plaintiff-style damages for accounting case settlements compared to 2023."

Additional Settlement Trends:

• Accounting case settlements with both alleged GAAP violations and allegations of internal control weaknesses fell to the lowest level in the past 10 years. The value of accounting case settlements for cases involving allegations of internal control weaknesses also fell to just 27% of the total of all accounting case settlements.
• Although the number of accounting case settlements involving restatements increased, the median settlement amount was 85% lower than in cases not involving a restatement.
• The median settlement amount as a percentage of plaintiff-style damages for accounting case settlements in 2024 was in-line with the 2015–2023 average for cases involving restatements and/or GAAP violations; however, cases involving a write-down were 42% lower than the average.

Previous reports have presented "simplified tiered damages" as a measure of potential investor losses. This year marks the introduction of "plaintiff-style damages," a measure of potential investor losses that accounts for additional case-specific data while still using a consistent approach across a large volume of cases. The latest investments in big data analytics and capabilities from Cornerstone Research's Data Science Center enabled this new approach.

About Cornerstone Research
Cornerstone Research provides economic and financial consulting and expert testimony in all phases of complex disputes and regulatory investigations. The firm works with an extensive network of prominent academics and industry practitioners to identify the best-qualified expert for each assignment. With a reputation for high quality and effectiveness, Cornerstone Research has consistently delivered rigorous, state-of-the-art analysis since 1989. The firm has more than 1,000 professionals in nine offices across the United States, UK, and EU.

SOURCE Cornerstone Research