AI-Related Claims and Other Securities Litigation Trends to Watch

Key Points

The rapid evolution of artificial intelligence is fueling a surge in AI-related securities claims.
The SEC’s reversal on mandatory arbitration provisions is poised to reshape the field, prompting debate among companies, exchanges and practitioners.
Plaintiffs are increasingly testing the limits of when expert opinions and short-seller reports can be credited at the motion-to-dismiss stage.
Plaintiffs are starting to target private credit lenders under Rule 10b-5, focusing on alleged misstatements about portfolio performance and asset values.
Tracing requirements for claims under the ’33 Act are likely to become a focal point in 2026, as parties grapple with the aftermath of the U.S. Supreme Court’s decision in Slack Technologies, LLC v. Pirani.

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New Filings Shift Toward AI-Related Claims

Securities class action filings remained elevated in 2025, signaling that robust activity will likely persist into 2026. According to economic and financial consulting company Cornerstone Research, through September 30, 2025, there were 161 new securities class actions filed in federal and state courts (consisting of 155 traditional filings and six merger objections).

Notably, only three cases under the Securities Act of 1933 (’33 Act) were brought in state court during this period, on track to be the lowest annual total since the U.S. Supreme Court’s 2018 decision in Cyan, Inc. v. Beaver County Employees Retirement Fund, 583 U.S. 416 (2018), which confirmed the concurrent jurisdiction of state courts over ’33 Act claims.

Beyond the numbers, AI-related class actions have outpaced other categories and are set to shape the litigation landscape in the coming year. For example, plaintiffs have filed a number of complaints based on allegations of “AI-washing” — misrepresentations about AI capabilities or revenues.

Plaintiffs also claim companies have:

Overstated AI-driven efficiencies.
Misleadingly rebranded legacy technology as AI (so-called AI-washing).
Concealed licensing or performance issues.
Exaggerated the pace and feasibility of AI integration.

The SEC’s Reversal on Mandatory Arbitration Provisions

On September 17, 2025, the Securities and Exchange Commission (SEC) announced that mandatory arbitration provisions in company governing documents will no longer influence the agency’s decision about whether to accelerate registration statements. Instead, the SEC will focus on the adequacy of the registration statement’s disclosures, including those about arbitration provisions. (See our September 26, 2025, client alert “SEC Reverses Course on Arbitration Clauses, Potentially Opening the Door to Their More Widespread Adoption.”)

The announcement marks a shift from the SEC’s prior stance, which viewed such clauses as potentially violating anti-waiver provisions of the federal securities laws by restricting judicial forums and class actions. Now, the SEC has adopted a neutral stance: It neither endorses nor opposes arbitration provisions in registration statements.

The same approach will apply if a Securities Exchange Act-reporting issuer amends its bylaws or charter to adopt an issuer-investor mandatory arbitration provision.

This policy shift sets the stage for further developments in 2026. Plaintiffs’ attorneys have already indicated plans to challenge mandatory arbitration provisions if adopted. Self-regulatory organizations, such as the New York Stock Exchange (NYSE) and Nasdaq, may also weigh in by crafting their own policies. There are numerous individual considerations that each issuer will have to take into account before adopting such provisions, and we don’t anticipate a flood of companies adopting such provisions immediately.

Expert Reports at the Pleadings Stage After NVIDIA

Lower courts continue to wrestle with plaintiffs’ use of expert opinions to support their allegations at the pleading stage. This strategy of using expert opinions gained traction after the U.S. Court of Appeals for the Ninth Circuit’s decision in E. Ohman J:or Fonder AB v. NVIDIA Corp., 81 F.4th 918 (9th Cir. 2023), which credited falsity allegations based partly on a post hoc expert analysis of NVIDIA’s reported revenues.

The Supreme Court initially granted certiorari to review the Ninth Circuit’s decision but ultimately dismissed the case as improvidently granted after oral argument. Since then, most district courts have declined to credit expert opinions unless they are grounded in particularized facts.

With no Supreme Court guidance, this area remains unsettled and further developments are likely as courts and litigants explore the boundaries of what is permissible at the motion-to-dismiss stage.

Short-Seller Reports: Ongoing Challenges for Plaintiffs

Plaintiffs are increasingly relying on allegations drawn from reports issued by short-sellers — investors with a built-in incentive to drive the issuer’s stock price lower. In assessing the elements of falsity and scienter, courts have generally been reluctant to credit “short report” allegations unless corroborated by independent, well-pled facts, such as company admissions.

Loss causation has proven to be another hurdle, as illustrated by the U.S. Court of Appeals for the Fourth Circuit’s recent decision in Defeo v. IonQ, Inc., 134 F.4th 153 (4th Cir. 2025). There, the plaintiffs alleged that IonQ, a quantum computing company, made materially false statements about its technology and prospects, relying on a report by Scorpion Capital LLC, an activist short-seller.

The report accused IonQ of running a “quantum Ponzi scheme” and misleading the public about its technology and revenues. After the report’s publication, IonQ’s stock price fell and plaintiffs claimed this decline established loss causation.

The Fourth Circuit affirmed the district court’s dismissal of the complaint for failing to plead loss causation. The court held in part that because Scorpion Capital’s report had relied on anonymous sources, included disclaimers of accuracy, and disclosed a self-interested financial motive, it was not a plausible corrective disclosure for loss causation purposes.

In reaching its conclusion, the court echoed the Ninth Circuit’s observation in In re Nektar Therapeutics Securities Litigation, 34 F.4th 828 (9th Cir. 2022), that plaintiffs face a “high bar … in relying on self-interested and anonymous short-sellers” when attempting to plead loss causation.

The Fourth Circuit, like the Ninth Circuit, left open the possibility that, under the right circumstances, a short-seller report might support loss causation. Still, the Fourth Circuit’s decision is a notable win for corporate defendants and signals that plaintiffs will face significant challenges when relying on similar reports.

Emerging Issues: Litigation Against Private Credit Lenders and ’33 Act Tracing

Looking ahead, several other trends warrant attention. Private credit lenders may become targets in securities class actions arising from capital raises involving retail investors. Plaintiffs have thus far treated private credit vehicles like traditional issuers under Rule 10b-5, focusing on alleged misstatements about portfolio performance and asset values.

Traceability — the requirement that plaintiffs “trace” their securities to a specific registration statement or prospectus for ’33 Act claims — may also become a flashpoint. In Slack Technologies, LLC v. Pirani, 598 U.S. 759 (2023), the Supreme Court held that Section 11 plaintiffs must plead that their shares can be traced to a particular registration statement.

On remand, the Ninth Circuit rejected the plaintiffs’ statistical analysis as legally insufficient to establish traceability. The Ninth Circuit also concluded that Section 12(a)(2) imposes the same tracing requirement as Section 11. This requirement may prove difficult to satisfy at the pleading stage in cases involving direct listings, post-lock-up expirations or follow-on offerings, where shares are held in fungible bulk by The Depository Trust Company. Tracing may also complicate class certification by making the putative class unascertainable and introducing individualized issues.

Final Thoughts

As we look to 2026, the securities litigation arena is poised for continued evolution. The intersection of emerging technologies, regulatory shifts and evolving pleading strategies will present both challenges and opportunities for companies, investors and practitioners alike. Monitoring these trends will be essential for navigating the year ahead.

Associate James M. Johnston contributed to this article.

Read the latest quarterly update from Skadden’s securities litigators: “Inside the Courts – November 2025.”

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