In many ways, 2020 was an unprecedented year. In midMarch, the United States abruptly went into lockdown as coronavirus cases began to spike; a national emergency was declared, travel bans and gathering restrictions were imposed, schools, workplaces, and restaurants were closed, and professional and college sports seasons were cancelled. The United States and the world came to recognize COVID-19 as a potentially unprecedented global catastrophe, a realization that “nearly broke the financial markets.” On March 16, 2020, the Dow Jones Industrial Average plunged nearly 13% (3,000 points) — the largest single-day drop in United States history — while the S&P 500 plummeted 12%, its worst day since 1987. Meanwhile, as “coronavirus fears ripped through Wall Street,” the VIX, a gauge of stock market volatility, spiked 43%, breaking the record set at the height of the 2008 financial crisis. CNN’s index of market sentiment was “flashing ‘extreme fear,’” while the Wall Street Journal’s so-called “fear gauge” (the CBOE Volatility Index) closed above 80 for only the third time in history (the first two occasions occurring during the 2008 financial crisis). The pandemic brought many global changes, and one of the broadest effects has been accelerated adoption of technology at work and at home. As a result, the technology sector received a significant boost.
It is against this extraordinary backdrop that we present our third annual Securities Litigation Year in Review publication, in which we analyze securities class actions filed nationally against publicly traded companies in the technology and communications sectors and summarize important decisions issued by courts in key jurisdictions during 2020. These cases are typically filed by shareholders seeking to recover investment losses after a company’s stock price drops following the disclosure of negative news. Plaintiffs typically assert claims under Sections 10(b), 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 (the “1934 Act”) based upon allegedly false and misleading statements or omissions made by the company and its officers, and, if the alleged misstatements or omissions are made in connection with a securities offering, under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (the “1933 Act”).
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