By Jonathan Stempel
Jan 31 (Reuters) - U.S. securities class actions have soaredto a two-decade high, topping levels during the financialcrisis, after a landmark January 2016 ruling meant to deterlawsuits in Delaware that accomplish nothing for shareholderssent many lawyers scurrying instead to federal courts.
There were 270 shareholder lawsuits in 2016 accusingcompanies of making false or misleading statements or concealingbad news about their businesses or mergers, a study released onTuesday by Cornerstone Research and Stanford Law School shows.
The number rose from 188 in 2015, and was the highest sincethe Private Securities Litigation Reform Act, designed to curbfrivolous lawsuits, took effect in 1995. A separate study lastweek from NERA Economic Consulting also noted a two-decade high.
Cornerstone attributed much of the increase to a surge infederal lawsuits challenging mergers, to 80 from 17.
That trend could prove sustainable.
It followed a series of Delaware state court decisionsculminating in Chancellor Andre Bouchard's January 2016rejection of a settlement arising from Zillow Group Inc's purchase of online real estate rival Trulia Inc.
Chancery Court judges decided to no longer reflexivelyapprove "disclosure-only" settlements requiring companies merelyto reveal more, often immaterial details about their mergers.
Lawyers are not entitled to six- or seven-figure paydays forwinning that, the judges said.
Roughly half of the Fortune 500 companies are incorporatedin Delaware, long seen as having laws favorable to business.
Cornerstone said the number of traditional securities classactions, often following revelations of weak financial resultsor regulatory probes, rose to 189 last year from 170 in 2015.
It said the "maximum dollar loss," or largest sums thatshareholders might claim in damages, rose to $823 billion from$371 billion, and topped even the $816 billion level from 2008.
Eighty of the 270 lawsuits targeted biotechnology,healthcare and pharmaceutical companies. Thirty-four targetedfinancial companies.
NERA, meanwhile, said settlements also increased, to 113last year from 109 in 2015.
It said the average settlement was $72 million, topped byHSBC Holdings Plc's $1.575 billion accord over lendingpractices at Household International Inc, a consumer financecompany it bought, and Merck & Co's $1.06 billion accordover its marketing of the painkiller Vioxx.
Those settlements were long in coming. The Householdlitigation began in 2002, and the Merck litigation in 2005.
A $7.2 billion settlement in 2006 over energy company EnronCorp's collapse remains the largest on record. (Reporting by Jonathan Stempel in New York; Editing by FrancesKerry)