#United States #Bethesda #securities litigation #U.S. Public Companies #SAR

Surge in Securities Litigation Risk for U.S. Public Companies in 2025

In a startling revelation, Securities Analytics Research (SAR) has published its latest report on the U.S. securities litigation landscape, indicating an unprecedented increase in litigation risk for public companies. As of July 2025, the total amount linked to securities litigation has surged by $1.8 trillion, painting a challenging picture for corporate stakeholders.

The Data Behind the Report

The findings stem from an analysis of disclosures made to the Securities and Exchange Commission (SEC) and their resulting impacts on stock prices. Over the last two years leading up to December 2024, incidents that negatively affected market capitalization were notably more frequent and severe—rising by 2.18% and 18.1%, respectively. With an average market cap loss of $160 million per High-Risk Adverse Corporate Event (ACE), these figures reflect a significant escalation in risk exposure for publicly listed companies.

SAR identified a total of 10,631 High-Risk ACEs from a sample of 4,544 U.S. public companies for the two-year period culminating in June 2025. Alarmingly, losses from these ACEs accounted for roughly $11.8 trillion in total capital losses—an increase of $1.8 trillion compared to previous findings. The report highlights that eight out of eleven sectors in the Global Industry Classification Standard (GICS) faced heightened risks, with the Information Technology sector leading in losses, trailing closely behind were Health Care and Consumer Discretionary sectors.

Sector-Wise Breakdown

Interestingly, the report outlines the specific sectors facing the greatest risks:

• - Health Care emerged as the most affected, experiencing a staggering $3.5 trillion in losses.
• - This was followed by Health Care and Consumer Discretionary, which reported losses of $1.8 trillion and $1.5 trillion, respectively.

As noted by Nessim Mezrahi, Co-Founder, and CEO of SAR, despite the prevailing trend of escalating equity valuations, public companies now find themselves navigating a complex environment of heightened litigation risks:

“Our analyses confirm that directors and officers of U.S. public companies face a significant increase in securities litigation risk in 2025.”

Implications for Public Companies

Management teams and boards must now grapple with these elevated risks, as the market environment becomes increasingly volatile. The implications of these findings are manifold. The Health Care sector witnessed losses equivalent to 25.88% of its market capitalization, while Industrials and Consumer Discretionary followed with percentages of 18.26% and 17.79%, respectively.

The Information Technology sector faced the heaviest losses per High-Risk ACE, averaging $2.21 billion. Other noteworthy industries included Communication Services and Consumer Staples, reporting average losses of $1.95 billion and $1.32 billion, respectively.

The findings raise challenging questions about corporate governance and risk management strategies amid these turbulent times. With the Health Care sector scoring a median of 33.18% on the SAR Risk Score, the data implies a heightened probability of facing securities class action suits, a reality also applicable to Information Technology and Consumer Discretionary sectors, scoring 25.41% and 26.39%.

Conclusion

The latest securities litigation risk report highlights a developing concern for U.S. public companies as they confront rising litigation risks amid seemingly favorable market conditions. SAR's platform, which accurately quantifies and forecasts litigation risks in real-time, could serve as a crucial tool for public companies striving to mitigate these looming challenges. As stakeholders prepare for the implications of these pressures, the emphasis on risk assessment and corporate transparency has never been more critical.