AI, Big-Dollar Suits Dominate Data on New Investor Class Actions

Allegedly unrealized artificial intelligence promises and cryptocurrency issues helped drive a surge in high dollar securities suits in the first half of 2025, according to a litigation report published Wednesday.

The first half of the year has seen a steady rise of lawsuits related to the emerging technologies as companies struggle with disclosures, compliance, and volatile markets, according to lawyers who talked to Bloomberg Law about the report published by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse.

“I kind of view the securities filings, in a way, as almost like a distant mirror on current events,” said Jonathan Youngwood, global co-chair of Simpson Thacher & Bartlett LLP’s litigation department. “They’re like a delayed reflection on what was happening a year ago or two years ago, what was the new ‘in thing’ or the new problem.”

With 12 cases involving AI-related claims in the top half of the year, as per the data, 2025’s already close to surpassing last year’s 15 filings. There were 21 in total from 2021 through 2023, the report said. It makes sense, attorneys said. More AI companies have gone public, and investors’ interest is piqued.

Youngwood and other attorneys say they’re not surprised that AI as well as cryptocurrency filings are on the upswing while Covid-tied litigation is falling five years after the pandemic took hold over the populace and equity markets.

The decline in Covid cases “just replicates what we’re seeing in society more broadly,” including “the fatigue with Covid generally,” said Jill E. Fisch, a professor at the University of Pennsylvania Law School. “It’s not what investors are thinking about, it’s not what companies are talking about. It’s become much less of an economically significant issue.”

AI, Crypto ‘Acceleration’

“Both the AI and crypto trends will continue to accelerate,” said Thomas Laughlin, a partner at Scott & Scott Attorneys at Law LLP who represents investors. “I think that you see a lot of people, particularly in the crypto space, who are viewing the loosening of regulation in that area as a green light to come forward with investments that are potentially going to trigger disclosure issues down the road.”

There have been a number of “exaggerated or opportunistic” corporate AI claims, and those give rise to “potential disclosure issues,” he added.

“Investors are trying to understand how AI fits into issuers’ business plans,” said Fisch. “AI statements are market-moving events, and so that’s going to be the focus of litigation until companies figure out what they’re doing with AI and get their disclosures right.”

Defense litigator Edmund Polubinksi, a partner at Davis Polk & Wardwell LLP, called AI “the flavor of the day for plaintiffs’ lawyers.” The plaintiffs’ bar is using hindsight to claim companies “should have anticipated more, back when AI was less of a focus than it is currently,” he said.

Similarly, crypto companies emboldened through a more friendly environment might go public and draw more securities suits, Youngwood said.

“As we wait for regulatory and legislative clarity” on crypto, “private plaintiffs are absolutely doing their best to fill that void,” said Lara Flath of Skadden, Arps, Slate, Meagher & Flom LLP.

‘Mega Filings’

Big-dollar cases, measured by drops in market capitalization, are up, according to Cornerstone. The drop between trading days just before and after the end of the class period is one way to assess the dollar size of cases, and there were 15 “mega” cases among them in the first half of 2025, according to the report.

That’s “three times the 1997–2024 semiannual average” and fits in between the numbers of such cases in the first and second halves of 2024, the report says.

“I suspect that reflects greater volatility in the market,” said Polubinski. “These likely reflect non-company-specific macroeconomic factors, which may have had a disproportionate impact on some companies.”

Trends noted in the report “underscore the importance of compliance on regulation, especially technology, biotechnology, AI-related technology, and I think you’re going to see big price movements,” said Anthony C. Varbero, a partner at Quintairos, Prieto, Wood & Boyer PA.

Plaintiffs’ attorney Jeffrey Golan of Barrack, Rodos & Bacine points to data in the report showing that 80% of the dollar decline is attributable to technology and certain consumer cases, mainly pharmaceuticals—about half the newly filed cases. He says there’s an even bigger concentration in those sectors when the dollar loss is measured from the market cap peak during the class period.

And that points to another phenomenon in the Cornerstone data, he said—an increase in suits filed within the Third Circuit, an area where many pharma companies are based.

Flath and Mark Foster, also of Skadden, say another trend they’re seeing is suits over small percentage price drops against companies with large market capitalization. “It doesn’t have to be double digits,” Flath said.

SPAC Suits Fade

Special purpose acquisition companies, or blank-check corporations used to help others go public, fell out of favor after a burst in the early 2020s amid regulatory scrutiny and waning investor interest. SPAC-related class filings have dipped in recent years, according to Cornerstone.

“You can’t have a SPAC or a de-SPAC case if you don’t have SPACs and de-SPACs, that just isn’t the way things are being done as much anymore,” Youngwood said.

While interest in blank-check companies ticked up recently, people working on SPACs have more experience now than when a surge of related complaints were filed years ago, said James J. Beha II, a partner at Baker Botts LLP.

“Even if there is some uptick in SPAC transactions, there’s less ability for anyone who raises a SPAC fund to raise money without having a track record,” Beha said, “and so I wouldn’t necessarily expect any increase in SPAC activity to lead to the same level of litigation as there was a couple years ago.”