Accounting
Accounting class-action filings rose slightly last year
The number of accounting-related securities class-action filings increased slightly in 2024, but were filed against smaller companies, according to a new report.
The
While the number of settlements remained the same as 2023, the total value of those settlements declined by 36% from the prior year.
While the number of accounting cases remained steady last year, they were filed against smaller issuer defendants. The median pre-disclosure market capitalization of issuer defendants dropped to $445.6 million, the lowest level in the past 10 years. In addition, the DDL Index (the dollar-value change in the defendant firm’s market capitalization) of accounting cases fell 42% to $45.6 billion and was 17% lower than the 2015–2023 historical average of $54.8 billion.
Last year, some of the filing trends changed. “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, in a statement. “That changed in 2024 when, for the first time since tracking began, allegations related to asset valuations and/or impairments were the most common.”
For the fourth consecutive year, the median pre-disclosure market capitalization of issuer defendants declined in 2024. Accounting cases filed in 2024 involving restatements decreased over 30% from 2023, returning to historical levels. Since 2015, 32 issuers had at least two separate complaints that included accounting allegations filed against them.
The median pre-disclosure market capitalization of issuer defendants decreased by 39% in 2024 to $745.5 million, which is consistent with lower median and average settlement amounts, as issuer defendant size is a proxy for the resources available to fund the settlement. The average settlement amount declined from $47 million to $30.1 million, while the median settlement amount fell from $15.4 million to $12 million.
After a spike in 2023, the average time from filing to settlement for accounting cases declined by over seven months, returning to a level consistent with the average over the previous 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, in a statement. “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.”
Accounting case settlements with both alleged GAAP violations and allegations of internal control weaknesses dropped to the lowest level in the past decade. The value of accounting case settlements for cases involving allegations of internal control weaknesses also decreased to just 27% of the total of all accounting case settlements.
While 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.
Earlier reports from Cornerstone Research have presented “simplified tiered damages” as a measure of potential investor losses. This year’s report is introducing “plaintiff-style damages” as a way of measuring potential investor losses that accounts for more case-specific data while still employing a consistent approach across a large volume of cases, drawing on investments in big data analytics and other capabilities from Cornerstone Research’s
Total postsecondary spring enrollment grew 3.2% year-over-year, according to a report.
The National Student Clearinghouse Research Center published the latest edition of its
The report found that undergraduate enrollment grew 3.5% and reached 15.3 million students, but remains below pre-pandemic levels (378,000 less students). Graduate enrollment also increased to 7.2%, higher than in 2020 (209,000 more students).
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Community colleges saw the largest growth in enrollment (5.4%), and enrollment increased for all undergraduate credential types. Bachelor’s and associate programs grew 2.1% and 6.3%, respectively, but remain below pre-pandemic levels.
Most ethnoracial groups saw increases in enrollment this spring, with Black and multiracial undergraduate students seeing the largest growth (10.3% and 8.5%, respectively). The number of undergraduate students in their twenties also increased. Enrollment of students between the ages of 21 and 24 grew 3.2%, and enrollment for students between 25 and 29 grew 5.9%.
For the third consecutive year, high vocational public two-years had substantial growth in enrollment, increasing 11.7% from 2023 to 2024. Enrollment at these trade-focused institutions have increased nearly 20% since pre-pandemic levels.
Jordan Vonderhaar/Photographer: Jordan Vonderhaar/
The Internal Revenue Service has released
The Inflation Reduction Act of 2022 amended Sec. 55 to impose the CAMT based on the “adjusted financial statement income” of an “applicable corporation” for taxable years beginning in 2023.
Among other details, proposed regs provide that “applicable corporation” means any corporation (other than an S corp, a regulated investment company or a REIT) that meets either of two average annual AFSI tests depending on financial statement net operating losses for three taxable years and whether the corporation is a member of a foreign-parented multinational group.
Prior to the publication of any final regulations relating to the CAMT, the Treasury and the IRS will issue a notice of proposed rulemaking. Notice 2025-27 will be in IRB: 2025-26, dated June 23.
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Total college enrollment rose 3.2%
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