For many years, the plaintiffs’ bar has been very active in bringing class action litigation against public companies immediately after the announcement of adverse news concerning a company, which many times triggers a decline in the company’s stock price. Since at least the Yahoo data breach in 2013 (which led to a settled SEC enforcement action and a recently-settled class action lawsuit), plaintiffs’ lawyers have been increasingly drawn to using data breach problems to allege misconduct or fraud by corporate officials charged with keeping the securities markets apprised of all material information about a public company. Continue Reading Federal Court Dismisses Federal Securities Class Action Based on Data Breach
Yahoo agreed to pay shareholders $80 million to settle a federal securities class action suit, as detailed in the parties’ March 2, 2018 proposed settlement agreement filed with the court. In that suit, the shareholders claimed that Yahoo failed to disclose a number of data breaches affecting more than 3 billion users, which caused Yahoo’s stock prices to fall. One of the named plaintiffs is not participating in the settlement. This was one of the first federal securities lawsuits arising out of a data breach. Several others have followed. If the court approves the settlement, it will be the first recovery in a shareholder lawsuit based on a data breach and certainly will encourage other such suits in the future.