Rising Securities Class Action Lawsuits Mark 2024 Trends

The number of securities class action filings rose for the second consecutive year in 2024, with artificial intelligence (AI)-related lawsuits more than doubling from the previous year, according to a newly released report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse.

Published on February 5, 2025

securities
Judge gavel on the table with blurry books in the background

The number of securities class action filings rose for the second consecutive year in 2024, with artificial intelligence (AI)-related lawsuits more than doubling from the previous year, according to a newly released report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse. Despite a continued decline in federal and state filings under the Securities Act of 1933, the overall increase signals an evolving landscape in securities litigation.

Key Findings from the 2024 Report

Plaintiffs filed 225 securities class action lawsuits in federal and state courts in 2024, up from 215 in 2023. “Core” filings—excluding merger and acquisition (M&A) lawsuits—rose to 220, a 14% increase compared to the 1997–2023 historical average of 193 cases.

The number of AI-related filings surged from seven in 2023 to 15 in 2024, making it one of the leading categories in securities litigation. COVID-19-related filings also saw a 36% increase compared to the previous year but remained below the peak level observed in 2022. In contrast, filings related to special purpose acquisition companies (SPACs) and cryptocurrency dropped by over 50% compared to 2023, continuing their downward trend. Cybersecurity-related filings also declined.

The top three trends in 2024 were:

  • AI-related filings (15 cases)
  • COVID-19-related filings (15 cases)
  • SPAC-related filings (11 cases)

Together, these accounted for nearly 20% of all core federal filings.

The Shifting Litigation Landscape

Federal and state filings under the Securities Act of 1933 declined 34% from 2023, reaching their lowest level since 2013. At the same time, federal Section 10(b)-only filings increased to a record high, reflecting a shift toward claims related to corporate misstatements and omissions rather than traditional securities offerings.

The size of securities filings also grew significantly. Measured by the Disclosure Dollar Loss Index (DDL Index), core filings increased 23% to $438 billion, far above the historical annual average of $237 billion. However, the Maximum Dollar Loss Index (MDL Index) declined sharply to $1.6 trillion, marking a 52% drop from $3.3 trillion in 2023.

The number of mega MDL filings—cases with more than $10 billion in maximum dollar loss—stood at 35, accounting for nearly 80% of total MDL losses.

Sector and Jurisdictional Trends

Among the 15 AI-related filings, eight were in the Technology sector, four in Communications, two in Industrials, and one in Consumer Non-Cyclical. Meanwhile, filings in the Consumer Non-Cyclical sector rose from 54 in 2023 to 67 in 2024, largely due to an increase in lawsuits targeting biotechnology companies in the second half of the year.

Geographically, for the second consecutive year, the Ninth Circuit saw the highest number of federal core filings (69), slightly ahead of the Second Circuit (64). The number of cases in the Second Circuit rose from 49 in 2023 to 64 in 2024, suggesting a resurgence in securities litigation within this jurisdiction.

Legal and Regulatory Considerations

Despite the increase in filings, securities litigation saw little movement at the U.S. Supreme Court level. The Court initially agreed to hear two cases involving private securities litigation but ultimately dismissed both without ruling on the underlying legal questions. Legal experts warn that this may signal the Court’s increasing reluctance to engage with securities cases in the future.

Meanwhile, cryptocurrency remains a critical area of uncertainty. Former SEC Commissioner Joseph Grundfest noted that regulatory reforms could significantly impact the volume of crypto-related litigation. If new regulations redefine certain cryptocurrencies as non-securities, securities litigation in this sector could decline further in the coming years.

Implications for Directors & Officers (D&O) Insurance

The rise in securities class action lawsuits, particularly those targeting AI-related companies and biotechnology firms, underscores the increasing risks faced by directors and officers of public companies. With claims on the rise and settlement sizes growing, D&O insurance costs could increase, and underwriting standards may tighten to reflect the heightened litigation exposure.

 

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