The number of lawsuits for securities filed during the first half of the year is down, but lawsuits related to specialty acquisition companies are up, says a report issued on Tuesday. & Co. also says that increased capacity in the market for board members and executives could lead to flat renewals by mid-2022, although this is unlikely to benefit SPAC. decrease from the 105 issued for the comparable period a year ago, according to the report by San Francisco-based Woodruff Sawyer & Co.
"If the average proportion of 15.2 cases submitted per month remains, we can finally see a decline below the ten-year average" of 186 cases for a total of about 182 this year, the report says, adding that it has no less than 200 of these cases have been submitted annually since 201
The report also states that the 91 cases reflect a steady stream of COVID-related cases. These accounted for 12% of the 91 cases submitted, which means that the total number of COVID-19-related cases submitted since the pandemic reached 31, according to the report.
Among other findings, the number of SPAC-related securities proceedings increased to 15 in the first half of this year, compared to five in 2020 and two in 2019.
The report warns, “The explosion of SPAC IPOs in the last six months is a concern for the insurance guarantees as the attempt to distinguish the D&O-related risks for companies disclosed through a deSPAC transaction.
"With the current filing rate, de-SPAC-related disputes can cover up to 17% of total filing in 2021."  The report says that with a dozen new entrants in the market for plan liability insurance and more expected next year, "there is some new hope", the new capacity will increase competition, which could relieve some of the upward pressure on surpluses in 2020.  However, this is not expected to benefit SPACS as "insurers are wary of disputes related to the de-SPAC process", the report says.