The first half of 2026 has witnessed a significant surge in securities class action litigation, marked by a notable increase in filings, escalating alleged investor losses, and substantial rises in settlement values. Two prominent consulting and expert firms, Cornerstone Research and NERA Economic Consulting, have independently released midyear reports detailing these critical trends, offering a comprehensive overview of the litigation landscape for investors and publicly traded companies. Both analyses highlight the pervasive influence of artificial intelligence (AI) in driving new litigation and underscore the evolving nature of securities fraud allegations.
Midyear Assessment Reveals Upturn in Litigation Activity
Cornerstone Research’s comprehensive midyear assessment of securities class action filings and settlements for the first half of 2026 reveals a robust uptick in litigation activity compared to the latter half of 2025. The firm’s analysis indicates a substantial rise in the number of new federal securities class action filings, alongside a significant increase in the reported dollar value of alleged investor losses. This upward trajectory is further corroborated by NERA Economic Consulting, whose own report, covering both case filings and resolutions, paints a similar picture of heightened legal scrutiny. NERA’s findings also point to a slight decline in the rate of dismissals for these cases, suggesting that a greater proportion of filings are progressing through the legal system.
Both Cornerstone and NERA have identified emerging themes in recent filings. Beyond the dominant influence of AI-related allegations, the reports highlight a rise in cases centered on tariff-related claims and instances of alleged pump-and-dump market manipulation schemes. These new trends suggest a diversification of the types of alleged misconduct that are triggering securities litigation.
AI Cases Fuel Record Filings and Alleged Losses
The most striking trend emerging from the H1 2026 data is the dramatic impact of artificial intelligence (AI) on securities class action filings. Cornerstone Research recorded 117 new federal securities class actions alleging violations of Sections 10(b), 11, or 12 of the Securities Exchange Act. This figure represents the highest semiannual total since the first half of 2020 and significantly surpasses the historical semiannual average of 97 filings.
A substantial driver of this surge in filings is directly attributable to AI. In the first half of 2026, 15 new securities class actions specifically cited AI-related issues, a number that nearly matches the total of 16 AI filings recorded for the entirety of 2025. These AI filings are further categorized, with seven cases focusing on AI development and five pertaining to data centers, underscoring the broad impact of this transformative technology across different facets of the industry.
While AI filings constituted approximately 13% of the total filings in H1 2026, they disproportionately accounted for the vast majority of alleged investor losses. The Disclosure Dollar Loss Index (DDL Index), a key metric used to measure the dollar-value change in a defendant firm’s market capitalization between the two days immediately preceding and following the end of a putative class period, surged by 77% from H2 2025 to reach $529 billion in H1 2026. Similarly, the Maximum Dollar Loss Index (MDL Index), which tracks the dollar-value change from the peak market capitalization during the class period to its end, experienced an 86% increase, reaching an astounding $1.86 trillion.
The financial impact attributed to AI filings is staggering. These cases alone accounted for $385 billion of the DDL Index and $1.3 trillion of the MDL Index, representing a remarkable 73% of each index. The scale of these alleged losses is further magnified by the fact that just two AI-related filings contributed a colossal $1.2 trillion, or 66%, to the total MDL Index, illustrating the immense financial stakes involved in these high-profile cases.
Emergence of New Litigation Themes: Tariffs and Market Manipulation
Beyond the overwhelming influence of AI, the first half of 2026 has also seen the emergence of two distinct new trends in securities class action filings. The first concerns allegations related to tariffs. Cornerstone Research noted that since August 2025, there have been six filings that directly involve tariff-related claims, with four of these occurring within the first six months of 2026. In these cases, plaintiffs typically allege that corporate defendants misrepresented their ability to navigate the complexities of tariffs or downplayed the negative financial repercussions of their strategies in response to US tariff policies. This trend reflects the ongoing global trade disputes and their tangible impact on corporate financial reporting.
The second emerging trend involves allegations of pump-and-dump market manipulation. Since November 2025, a total of 10 such filings have been initiated, with eight of these occurring in H1 2026. A significant characteristic of these cases is their venue and target: almost all (nine out of ten) have been filed against non-U.S. issuers in district courts located within the jurisdiction of the U.S. Court of Appeals for the Second Circuit. This geographical concentration suggests a strategic approach by plaintiffs’ counsel in pursuing these types of allegations.
Geographic and Industry Hotspots in Litigation
The geographical landscape of securities class action filings continues to be dominated by specific federal circuits. The Second and Ninth Circuits have maintained their positions as the most active jurisdictions, collectively accounting for 70% of all filings in H1 2026, a slight increase from 64% in H2 2025. Filings in the Second Circuit saw a substantial rise to 46 in H1 2026, up from 34 in the previous period, largely fueled by an influx of cases within the technology sector. The Ninth Circuit also experienced an increase, with 34 filings in H1 2026, compared to 23 in H2 2025. Notably, six of these Ninth Circuit filings were AI-related. The Third Circuit also showed a notable uptick, recording 12 filings in H1 2026, double the number from H2 2025, though still significantly lower than the 20 filings seen in H1 2025.
By industry, the consumer noncyclical sector, primarily driven by life sciences and healthcare companies, continued to be the most frequent target of securities class actions. This sector saw 44 filings in H1 2026, an increase from 35 in H2 2025. The technology sector followed, with 24 filings, a substantial leap from nine in H2 2025 and double its semiannual average of 12. This surge in technology-related litigation is, as previously noted, largely attributable to the wave of AI filings.
Increased Settlement Activity and Higher Values, Extended Timelines
Both Cornerstone Research and NERA Economic Consulting reported a significant increase in the number and value of securities class action settlements during the first half of 2026. Cornerstone recorded 39 settlements in H1 2026, compared to 32 in the same period of the previous year. The total settlement value reached an impressive $2.2 billion. If this annualized, it would represent the highest total settlement value observed since 2020.
Furthermore, the average settlement value in H1 2026 stood at $56.4 million, and the median settlement value was $20 million. Both of these figures represent a substantial increase when compared to the average ($46.8 million) and median ($13 million) settlement values recorded between 2017 and 2025, indicating a trend towards larger financial resolutions.
The distribution of settlement values also shows a clear shift towards higher amounts. Only 15% of H1 2026 settlements were valued below $5 million, a marked decrease from the 26% observed in the 2017-2025 period. A significant portion of H1 2026 settlements were concentrated in two key ranges: $5 million to $9 million (26%) and $25 million to $49 million (26%). Each of these ranges now accounts for a larger share of settlements than they did historically. The period also saw four "mega settlements" – those exceeding $100 million – which aligns with historical patterns.
Cornerstone’s analysis of settled Section 10(b) cases revealed that plaintiff-style damages, a proxy for potential investor losses, is the most critical factor influencing settlement amounts. In H1 2026, the median plaintiff-style damages for these cases reached $660 million, more than double the $290 million reported for 2025. The average plaintiff-style damages surged to $1.5 billion, marking a 29% increase from 2025. While settlement values increased more modestly than plaintiff-style damages, the median settlement in Section 10(b) cases reached its highest point in a decade. The median settlement as a percentage of plaintiff-style damages was 5.4% in H1 2026, representing the second-lowest ratio in nine years, suggesting that while settlement amounts are rising, they are not keeping pace with the escalating alleged losses. The median settlement amount itself, however, was $23 million, a 44% increase from 2025.
Several factors consistently correlate with higher settlement amounts. These include cases involving both Section 10(b) and Section 11 claims, the availability of substantial defendant assets, the presence of parallel derivative actions, and the involvement of an institutional investor as lead plaintiff. Notably, in H1 2026, parallel derivative actions and institutional investor lead plaintiffs were prevalent in 61% of settled cases involving Section 10(b) claims, highlighting their continued importance in driving substantial settlements.
Complementing Cornerstone’s findings, NERA Economic Consulting observed an increase in the timeline for resolving these cases. The median time from filing to settlement extended from 3.3 years in 2025 to 3.7 years in 2026, marking the second-longest median resolution period in the past decade. This suggests that while settlements are increasing in value, they are also taking longer to finalize.
Fewer Dismissals Signal Increased Litigation Momentum
NERA’s report also provides insights into case dismissals. In H1 2026, NERA recorded 56 dismissals. When annualized, this projects to approximately 112 cases dismissed, a decrease from the 136 dismissals observed in 2025. This reduction in dismissals suggests that fewer cases are being thrown out early in the legal process, potentially indicating that plaintiffs’ complaints are being more robustly pleaded or that courts are allowing more cases to proceed to discovery and potential settlement. The median time from the filing of the first complaint to a dismissal remained relatively stable at 1.5 years in 2026, consistent with previous years.
The trends observed in the first half of 2026 paint a clear picture of a dynamic and increasingly active securities litigation environment. The pervasive influence of AI, coupled with emerging concerns around tariffs and market manipulation, indicates that corporate executives and boards must remain vigilant in their disclosure practices and risk management strategies. The rising settlement values, while potentially offering greater recoveries for investors, also underscore the significant financial and reputational risks associated with securities litigation. The extended timelines for resolution further suggest that companies facing such allegations should prepare for prolonged legal battles and the associated costs and distractions.
