Securities Lawsuit Payouts Double Despite Drop in New Filings

BETHESDA, MD – January 09, 2026 – A startling shift is underway in the world of corporate litigation. The average settlement value for private securities fraud class actions nearly doubled in the second half of 2025, even as the number of new lawsuits filed against public companies declined. This paradoxical trend suggests a strategic pivot by plaintiff law firms towards securing larger payouts from fewer, higher-stakes cases, dramatically escalating the financial risk for corporate boards and their officers.

A new report published today by Securities Analytics Research (SAR), a data analytics firm specializing in litigation risk, reveals that the average settlement for Rule 10b-5 securities class actions surged to $42.8 million in the latter half of 2025. This represents an astonishing 95% increase compared to the first half of the year. In total, 20 such cases were settled for a combined $856 million during the period.

The surge in settlement values occurred amid a quieter landscape for new litigation. The frequency of securities class action filings and the volume of alleged fraud-revealing corporate disclosures both fell significantly. Yet, the financial impact of each claim remained potent.

"Investor plaintiffs spent greater effort doubling private securities-fraud litigation settlements during the second half of the year than filing new lawsuits," said Nessim Mezrahi, Co-Founder and CEO at SAR. "Average Rule 10b-5 settlements have doubled and now exceed $40 million per suit."

The Trillion-Dollar Disconnect

The data from SAR paints a complex picture of the current litigation environment. While the pace of new claims slowed, the overall scale of alleged misconduct remains immense. Alleged market capitalization losses tied to fraud claims against U.S. and non-U.S. issuers amounted to $307.7 billion in the second half of 2025, a 59% decline from the first half. This drop was driven by a lower number of corporate disclosures—109 in the second half compared to 163 in the first—that plaintiffs claimed exposed securities fraud.

However, this decline in new activity belies a more significant long-term trend. For the full year of 2025, the total market capitalization losses plaintiffs alleged were tied to fraud surpassed a record-breaking one trillion dollars. This indicates that while firms may be filing fewer suits, the underlying events triggering them involve catastrophic shareholder losses.

This disconnect highlights a focus on quality over quantity. Even with fewer filings, the financial substance of each individual claim has not diminished. "Despite the decline in filing frequency and a lower count of alleged fraud-revealing corporate disclosures in 4Q, market capitalization losses per Rule 10b-5 claim and alleged stock drop remained relatively stable," noted Stephen Sigrist, SVP at SAR. The data shows that average losses per claim hovered around $4 billion in the last two quarters of 2025, underscoring the massive scale of the cases that are being pursued.

A Strategic Shift to 'Mega-Litigation'

The dramatic increase in settlement values is not a random occurrence but rather the result of a calculated strategic shift by the plaintiff's bar. Legal experts and market data suggest a growing focus on what is being termed "mega-litigation"—concentrating immense resources on a smaller number of cases against large corporations where potential damages are astronomical.

This approach allows plaintiff firms to maximize their return on investment. Instead of spreading resources across dozens of smaller, less certain claims, they are performing more rigorous upfront research to identify cases with the highest probability of a massive payout. This trend is exemplified by the performance of top-tier firms like Bernstein Litowitz Berger & Grossman LLP, which SAR identified as a top-performing firm since 2018. The firm boasts an average settlement of $94.1 million in private Rule 10b-5 litigation, more than double the industry average.

Achieving these outcomes involves aggressive litigation tactics, including extensive discovery and a willingness to take cases to trial, which pressures defendants into more substantial settlement negotiations. By focusing on cases with clear evidence of wrongdoing and significant shareholder losses, these firms are able to build powerful arguments for nine-figure settlements.

Rising Risks for Boards and Insurers

For public companies, this new era of high-value litigation presents a formidable and escalating challenge. The decrease in filing frequency offers little comfort when the financial exposure from a single lawsuit has effectively doubled. This new reality demands a significant evolution in corporate risk management and governance.

Boards of directors and executive teams are now under intense pressure to fortify their internal controls, enhance compliance programs, and ensure absolute transparency in their financial reporting and corporate disclosures. The stakes have never been higher, as a single misstep could trigger a lawsuit with the potential to wipe out hundreds of millions of dollars in shareholder value and settlement costs.

This trend is also sending shockwaves through the Directors & Officers (D&O) insurance market. After a period of softening rates and increased capacity, the market is bracing for a correction. The sharp rise in average settlement values directly impacts insurer profitability and loss ratios. As a result, companies, particularly those in high-risk sectors like technology and financial services, should anticipate higher premiums, stricter underwriting standards, and potentially lower coverage limits in the near future.

Adding to the pressure is the emergence of new risk factors. Regulators and plaintiffs are increasingly targeting companies for "AI washing"—exaggerating their artificial intelligence capabilities to inflate stock prices. This, along with persistent scrutiny over environmental, social, and governance (ESG) disclosures, provides fertile new ground for the next wave of mega-litigation.

Data-Driven Accountability

Underpinning this entire trend is a growing reliance on sophisticated, independent data analytics to build and prosecute these complex cases. Firms like SAR provide the evidentiary support that empowers plaintiffs to negotiate from a position of strength. By applying court-approved methodologies like event studies, these analysts can verifiably estimate the economic damages caused by alleged fraud with a high degree of precision.

Notably, SAR emphasizes its reliance on human-led analysis and documented procedures, deliberately avoiding AI and machine learning to ensure accountability and independence in its findings. This commitment to verifiable data gives plaintiffs the leverage to justify their multi-million dollar settlement demands in mediated negotiations.

As the landscape of securities litigation continues to evolve, one thing has become clear: data-driven accountability is the new standard. The ability to precisely quantify damages has armed plaintiff firms with the tools needed to secure historic settlements, fundamentally altering the risk calculus for every public company in the market.