#USA #New York #private credit #AI-related lawsuits #tariff-related suits

Securities Plaintiffs' Bar Adapts Amid Surge in AI and Credit Lawsuits

The securities plaintiffs' bar has seen a remarkable shift in dynamics, particularly in light of the surge in lawsuits related to AI, tariff implications, and private credit matters in 2026. While filings decreased in the previous year, 2025 was merely a period of strategic rethinking. As Thomas Przybylowski, a litigation attorney with a wealth of experience in handling cases in New York and New Jersey, pointed out, the decline in filings disguised an important evolution in legal strategies being adopted by suing firms.

Understanding the Shift in Securities Class Actions

According to NERA Economic Consulting, a total of 118 new federal securities class actions were filed in the first half of 2026, indicating a possible peak that could reach around 236 filings by year's end, surpassing previous records set in 2023. Notably, the litigation surrounding artificial intelligence has drastically intensified, with 18 AI-related securities lawsuits already filed in just six months, eclipsing the total of 17 cases from the entire previous year.

Przybylowski emphasized that the plaintiffs' bar isn't pioneering new legal grounds; rather, they're utilizing established fraud statutes in novel circumstances, specifically targeting corporate disclosures linked to AI. He noted, "Plaintiffs aren't inventing new legal theories to reach these cases. They're focusing on existing fraud statutes against new categories of corporate disclosures, particularly those tied to AI capabilities and projections. Companies must treat any statements about AI with the same scrutiny required for revenue forecasts."

Emerging Trends: Tariffs and Private Credit Lawsuits

Alongside the significant increase in AI lawsuits, there has been a noticeable rise in litigation pertaining to tariffs and private credit concerns. Within the last year, six tariff-related securities suits emerged, with allegations centering on companies' exaggerated claims about their capacity to manage tariff-related challenges. Moreover, ten pump-and-dump cases have been filed, primarily against companies outside the U.S.

A notable trend is that private credit lenders are now facing scrutiny similar to traditional public issuers under Rule 10b-5, as plaintiffs argue misrepresentations concerning portfolio performance and asset evaluations. This marks a significant change in the treatment of securities fraud within a lending sector that hasn't traditionally faced class-action inquiries.

Legal Frameworks and Challenges

One of the contentious issues remains whether the Private Securities Litigation Reform Act's discovery stay applies to claims under the Securities Act of 1933 in state courts, a question lingering since the Cyan v. Beaver County Employees Retirement Fund Supreme Court decision in 2018. Interestingly, filing data shows a surprising trend: only three Securities Act of 1933 claims were lodged in state courts through the third quarter of 2025, marking the lowest pace since the Cyan ruling. This decline can partly be attributed to the Supreme Court's Slack Technologies v. Pirani decision, which has made it more challenging to plead such claims.

On the other hand, at the pleading stage, there is an ongoing battle around the validity of expert opinions in supporting fraud allegations before discovery can commence. Courts are still determining how much weight these reports carry, especially in light of a recent Fourth Circuit ruling that dismissed a case based on a short-seller report, citing issues with reliability and sufficiency to establish loss causation.

A Shift in Business Model for Financial Firms

Significant changes are on the horizon as the SEC's reversal of its long-standing policy regarding mandatory arbitration provisions in corporate documents could reshape the filing landscape substantially. This decision, announced on September 17, 2025, allows companies to potentially adopt arbitration clauses that funnel investor disputes away from court and traditional class-action frameworks. If plaintiffs' firms fail to challenge such provisions effectively, it could lead to a fundamental alteration in the landscape of securities litigation, removing the class-action avenue for companies opting for arbitration.

The Future of Securities Litigation

Przybylowski concluded by stating, "The critical question is not whether companies could potentially face lawsuits under these new theories but whether their disclosure committees have thoroughly reviewed the complaints related to their industry and adjusted their public statements accordingly to mitigate risk. Companies that interpret 2025's filing statistics as a definitive trend may find themselves blindsided by the rapid developments unfolding in 2026."

The landscape of securities litigation is evolving, prompting a need for vigilance and adaptability among firms as they navigate this shifting terrain.

For detailed updates and to stay informed, you can follow Thomas Przybylowski's ongoing analysis as it unfolds.