Securities class action lawsuits in US federal and state courts increased for a second consecutive year in 2024, driven by a rise in artificial intelligence and Covid-related filings, according to a new report from Cornerstone Research and Stanford Law School’s Securities Class Action Clearinghouse.

The Securities Class Action Filings – 2024 Year in Review report shows plaintiffs filed 225 lawsuits, up from 215 in 2023. The number of ‘core’ filings – excluding those related to M&A – reached 220, 14% higher than the historical average of 193 between 1997 and 2023.

AI and Covid-19 issues saw the most filings with 15 each – AI filings more than doubled from seven in 2023, while Covid-19 filings increased by more than a third. That was followed by SPAC-related filings (11), all three of which accounted for almost a fifth of core federal filings, the survey data showed.

SPAC-filings, however, were down by more than half, as were crypto-related filings.

Joseph Grundfest, professor emeritus at Stanford Law School and a former SEC Commissioner, said: “Prospectively, crypto is the elephant in the room. How will the statutes and regulations be reformed? If much of crypto is redefined as not constituting a security, then securities litigation in that sector will obviously plummet. Stay tuned, is about all one can say.”

More than half of the AI-related filings were in the technology sector, with four in communications, two in the industrial sector and one in the consumer non-cyclical sector.

The latter sector saw a jump in class actions filings, rising to 67 from 54 in 2023, driven by an increase in filings against biotech companies.

The number of mega DDL (disclosure dollar loss) filings reached 27 in 2024, the highest on record, the value of which was also the third highest on record at $438bn. Meantime, the share of core federal filings with Rule 10b-5 claims – those that result in fraud or deceit in connection with the purchase or sale of any security – rose to the highest level in more than five years.

The number of core federal filings in the Ninth Circuit exceeded those in the Second Circuit for a second consecutive year (69 compared to 64), however the number of filings in the Second Circuit increased sharply from 49 in 2023.

Despite the overall increase in class actions, filings with claims under the Securities Act of 1933 declined by a third to the lowest level since 2013.

Grundfest added: “Retrospectively, ‘no news’ is the big news in the world of securities litigation. The US Supreme Court initially agreed to hear two cases involving private securities litigation but then dismissed both with no decision on the underlying questions of law. The concern among practitioners is that the court will, in the future, be even more selective in deciding whether to hear securities cases.”