Recent Trends in Securities Class Actions: A Midyear Review
Two prominent consulting firms, Cornerstone Research and NERA, have recently released their midyear assessments on securities class actions for the first half of 2025. The reports reveal a steady number of filings but highlight notable trends such as rising alleged losses and significantly higher average settlement values.
Overview of Filing Trends
Cornerstone’s report indicates that there were 111 securities class actions filed in H1 2025, closely matching the 112 filings in H2 2024. This consistency is notable as it remains above the historical semiannual average of 97. Contrarily, NERA reported slightly fewer total filings, with 99 actions alleging violations of key securities laws. Both firms noted an uptick in significant "mega filings," where changes in market capitalization are in the billions.
Rising Alleged Losses and Settlement Values
While the number of new filings remained consistent, the reports noted an extraordinary increase in the measures of potential investor losses. The Disclosure Dollar Loss Index (DDL Index) reached $403 billion, marking a 56% increase from the previous half year. The Maximum Dollar Loss Index (MDL Index) saw an even steeper climb to $1.851 trillion, nearly $200 billion above the entire 2024 figure. This surge reflects significant filings primarily within the biotechnology, pharmaceutical, and technology sectors.
The Impact of AI, Cryptocurrency, and Life Sciences
A focal point in Cornerstone’s assessment is the increase in filings related to emerging sectors. In H1 2025, there were 12 filings involving artificial intelligence, which is projected to surpass the total of 15 from 2024. Cryptocurrency-related filings also saw an uptick, with six cases reported—potentially doubling the 2024 total of seven. The consumer noncyclical sector led the way, particularly in biotechnology and pharmaceuticals, which accounted for a substantial share of the filings.
Allegations of Missed Earnings Guidance
An interesting trend observed by NERA was that 44% of the filings in H1 2025 involved allegations regarding missed earnings guidance—the highest percentage in five years. This trend highlights growing investor sensitivity regarding companies’ financial forecasts, particularly amid ongoing economic uncertainty.
Jurisdictional Shifts in Filings
Both firms reported that the Second and Ninth Circuits remained the most common jurisdictions for new filings, although filings fell in these areas by almost 20%. Meanwhile, the Third Circuit experienced a notable increase, more than tripling the number of filings compared to the second half of 2024, largely attributed to suits against life sciences companies.
Dismissals and Resolutions: A Quickening Pace
The frequency of case resolutions also showed significant changes in 2025. NERA recorded 104 resolved cases in H1 2025, with 77 being dismissals—marking a potential annualized increase of 37.5% from the previous year. Notably, the median time to dismissal shrank to 1.6 years, down from two years in 2024, indicating a more efficient process for courts.
Settlement Dynamics: Fewer Settlements, Larger Values
Despite the decline in the number of settlements—only 27 compared to 85 in 2024—the average settlement value saw a substantial rise to $56 million, a 27% increase from the previous year. Larger settlements increasingly constituted the total aggregate; settlements exceeding $100 million grew, indicating a shift in focus towards more significant financial risks for companies involved in these class actions.
Conclusion
In summary, the reports from Cornerstone Research and NERA highlight significant developments in securities class actions for H1 2025. Despite stable filing numbers, the rising allegations of financial misconduct, particularly in high-stakes industries such as AI and biotechnology, signal shifting investor expectations and greater court activity. As trends continue to evolve, stakeholders in the financial sector will do well to stay informed about these patterns in compliance and litigation.