Securities Class Action Litigation Exposure Sets New Record in First Half of 2025

BETHESDA, Md., July 10, 2025 /PRNewswire/ — SAR, a data analytics company specialized in the securities class action risk of U.S. public companies, today published the Securities Class Action Rule 10b-5 Exposure Report for 2Q 2025.  According to the report, alleged fraud-related market capitalization losses claimed against directors and officers of defendant U.S. public companies sued during second quarter amount to $451.5 billion.  The magnitude of securities class action exposure impacting defendant issuers over the preceding quarter is record-setting.  During the preceding six months, investor plaintiffs have claimed approx. $749.3 billion in market capitalization losses stemming from alleged violations of Rule 10b-5. 

According to the report, based on SAR’s independent application of the court-approved event study methodology, the magnitude of exposure severity per Rule 10b-5 claim against U.S. issuers during the preceding quarter amounts to $13.0 billion – a quarterly increase of 188.2%.  Alleged market capitalization losses per alleged stock drop amount to $6.3 billion – a quarterly increase of 136.1%. 

So far in 2025, the median ratio of settlements to the market capitalization of defendant companies is more than three times the median of all Rule 10b-5 shareholder class actions settled prior to 2025, through 2018.  Empirical analysis indicates that shareholder settlements, as a percentage of defendants’ market capitalizations, appear to be increasing substantially.

“Persistent equity market volatility and increased investor scrutiny of AI utilization require issuers to embrace a more robust disclosure controllership framework to mitigate securities litigation risk. Today, securities litigation exposure is demonstrably greater due to the magnitude of the stock drops implicated in shareholder class actions.  Three consecutive quarterly increases in market cap. losses leading to record-setting litigation exposure is a wake-up call for directors and officers of an increasingly complex corporate disclosure landscape,” said Nessim Mezrahi, CEO of SAR.

Key takeaways:

• SCA Rule 10b-5 Exposure for U.S. and non-U.S. issuers reached a new all-time high of $451.5 billion in 2Q’25, exceeding the previous record of $335.8 billion set in 1Q’22.
• Record-breaking securities litigation exposure was primarily driven by Tucker v. Apple Inc. et al., which accounts for 81.7% of this past quarter’s aggregate alleged market capitalization losses.
• Near record-high exposure per alleged stock drop, which now accounts for $6.3 billion, is a 136.1% increase relative to 1Q’25.
• Data continue to validate that securities class action frequency and loss severity do not move in tandem. Global exposure increased by approximately 97% in 1H 2025 relative to 2H 2024, while filing frequency remained relatively stable.

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SOURCE SAR