SAR Rule 10b-5 Exposure Report 4Q 2024

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GLOBAL SCA RULE

10b-5 EXPOSURE

Global SCA Rule 10b-5 Exposure Amounted to $218 Billion in the Fourth Quarter of 2024

Global exposure to Rule 10b-5 private securities-fraud litigation of U.S.-listed companies amounted to approx. $105 billion and $114 billion for U.S. and Non-U.S. Issuers, respectively, in 4Q'24.i Global fraud-on-the-market litigation exposure increased by 35.0% relative to 3Q’24 driven by a 16.2x increase in exposure from alleged violations of Rule 10b-5 against Non-U.S. Issuers.

SAR analyzed 46 securities class actions (“SCAs”) against U.S. public corporations that were sued for alleged violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, promulgated thereunder (the “Exchange Act”) during 4Q’24.ii SAR’s SCA data presented in this quarterly report excludes one SCA filed this past quarter (see Appendix-1).

Alleged market capitalization losses based on statistically significant residual stock price returns of U.S.-listed corporations amounted to $218.5 billion in 4Q’24, an increase of 35.0% from the last quarter’s global exposure of $161.8 billion. Approximately $3.3 billion, or 1.5% of investor plaintiffs’ alleged market capitalization losses, do not surpass statistical thresholds of stock price reaction to warrant inclusion in a certified SCA. As a result, $3.3 billion in alleged shareholder losses claimed during the fourth quarter of 2024 may not translate into potential aggregate damages to provide settlement recoveries for allegedly defrauded investors in the Defendant issuers’ common stock.

Global SCA Rule 10b-5 Litigation Exposure: Investor plaintiffs' alleged fraud-related market capitalization losses in 4Q’24 are driven by Exchange Act claims against two Non-U.S. issuers. Since 2020, quarterly litigation exposure of non-U.S. issuers has never eclipsed that of U.S. issuers until the fourth quarter in 2024. Rule 10b-5 exposure of Non-U.S. Issuers in 4Q'24 exhibited a significant increase amounting to $113.9 billion, breaking the previous record of $79.3 billion set in 4Q’20. Exposure of Non-U.S. Issuers is driven by investor plaintiffs' alleged losses in City of Hollywood Firefighters' Pension Fund v. ASML Holding N.V. et al and Jeries Saleh v. AstraZeneca PLC et al. These cases amount to $74.2 billion and $31.3 billion, respectively, in alleged market capitalization losses.

Global Securities Class Action Rule 10b-5 Exposure

U.S. SCA RULE 10b-5 EXPOSURE

U.S. SCA Rule 10b-5 Exposure Amounted to $105 billion in the Fourth Quarter of 2024

Rule 10b-5 private securities-fraud litigation exposure against U.S. Issuers decreased by 32.4% during 4Q'24.iii A lower number of alleged corrective disclosures and lower observed filing frequency drove the decline in alleged market capitalization losses against U.S. Issuers. The number of alleged corrective disclosures declined from 105 in 3Q to 64 in 4Q, the lowest throughout 2024. U.S. SCA Rule 10b-5 Exposure decreased by $64.5 billion from the annual peak in 2Q'24.

SAR analyzed 40 securities claims against U.S. issuers that were sued for alleged violations of the Exchange Act in 4Q’24.iv U.S. SCA Rule 10b-5 Exposure (alleged market capitalization losses based on statistically significant residual stock price returns) of U.S. issuers to claims that allege violations of the Exchange Act amounts to $104.6 billion.v

U.S. SCA Rule 10b-5 Litigation Exposure: Market capitalization losses exhibited the second consecutive quarter-over-quarter decrease in 4Q’24. Exposure against U.S. Issuers was the lowest exposure per Exchange Act claim at $2.6 billion in 2024, a reduction of 22.3% relative to 3Q'24. Notwithstanding these declines, alleged market capitalization losses per alleged stock drop increased from $1.5 billion in 3Q’24 to $1.6 billion in 4Q’24.

In 2024, the average settlement in observed private Rule 10b-5 securities-fraud litigation was 23.4% higher than the average settlement on claims analyzed by SAR during the last 6 years.

Table 1:

Identified and analyzed

[2] U.S. SCA Rule 10b-5 Exposure is equal to investor plaintiffs alleged market cap. losses that may surpass back-end price impact thresholds based on

[5] Number of defendant U.S. issuers divided by the

U.S. SCA Rule 10b-5 Exposure Rate during the fourth quarter is the lowest during the preceding four quarters at 0.17%. The fourth quarter is record-breaking at approx. $60.3 trillion in aggregate market capitalization of U.S. issuers, continuing the trend of the preceding quarter.

Rule 10b-5 Claim Deficiencies Against U.S. Issuers: Approximately $3.3 billion, or 3.1% of alleged shareholder losses against U.S. Issuers, do not surpass statistical thresholds of stock price reaction at the 95% confidence standard to warrant inclusion in a certified SCA. As a result, approximately $3.3 billion in alleged shareholder losses claimed during the fourth quarter of 2024 in first-filed SCAs against U.S. Issuers and certain directors and officers may not translate into potential aggregate damages to result in potential settlement recoveries.

The sample of 16 alleged corrective disclosures claimed in 4Q'24 run afoul of both Dura's loss causation standards of economic loss, and Goldman's more robust mismatch standard of class certification - which requires a thematic underpinning between the alleged misstatement and the purported corrective disclosures. Without a statistically significant decline on stock price from company-specific information of the alleged corrective disclosure, there is no fraud-related economic impact to rectify the alleged falsity on the front-end.

Table 2: Econometric Summary of Residual Stock Price Reaction of Plaintiffs’ Alleged Corrective Disclosures Against U.S. Issuers

[1] Identified and analyzed first-filed SCA complaints that allege violations of Rule 10b-5. Excludes non-U.S. issuers that trade through ADRs.

[2] The number of alleged corrective disclosures identified in the sample of first-filed SCA complaints.

[3] Total U.S. SCA Rule 10b-5 Exposure for the identified sample of claims divided by the number of identified alleged corrective disclosures [2].

[4] The number of alleged corrective disclosures that do not exhibit a statistically significant one-day residual stock price return at the 95% confidence standard.

[5] The ratio of the number of alleged corrective disclosures that do not exhibit a statistically significant one-day residual stock price return at the 95% confidence standard to the total number of alleged corrective disclosures. ([5] = [4] / [2])

During 4Q’24, SAR analyzed 55 first-filed “stock-drop” SCAs filed against U.S. Issuers that allege violations of Rule 10b-5 via 109 claimed corrective events or truth-revealing disclosures. vi After analyzing and consolidating cases with seemingly related allegations against individual U.S. issuers, SAR accounted for and analyzed 40 filed SCAs. A total of 64 alleged corrective disclosures have been claimed in the 40 first-filed SCAs. vii

The number of alleged stock drops decreased from 105 in 3Q’24 to 64 in 4Q’24, a decrease of 39.0%. During 4Q’24, investor plaintiffs alleged, on average, 1.6 corrective disclosures per firstfiled SCA complaint. Of the 64 corrective disclosures alleged during 4Q’24, the allegedly related residual stock price decline of 16 disclosures (25.0%) did not surpass statistical thresholds of stock price reaction at the 95% confidence standard, which is

highly unfavorable for plaintiffs to successfully establish backend price impact. viii

25.0% of investor plaintiffs’ alleged stock drops in the sample of first-filed class action complaints run afoul of the heightened pleading standards of loss causation because they lack statistical significance at the 95% confidence standard to merit potential aggregate shareholder damages after excluding noncompany and non-fraud related factors. ix

The percentage of alleged corrective disclosures with no price reaction at the 95% confidence standard has ranged between 18.7% and 25.0% over the preceding twelve months. The alleged market capitalization losses per alleged stock drop increased to $1.6 billion in 4Q'24.

SCA RULE 10b-5 EXPOSURE

BY INDUSTRY SECTOR FOR U.S. ISSUERS

Industry Sector Impact From Rule 10b-5 Litigation Exposure During the Fourth Quarter of 2024

The industries impacted most based on alleged market capitalization losses that exhibited statistically significant alleged stock drop declines are Financials (33.5%), Health Care (25.7%), and Industrials (14.4%), which collectively accounted for 73.6% of U.S. SCA Rule 10b-5 Exposure in 4Q’24.

SAR analyzed 40 first-filed SCAs in 4Q’24, of which, 10 (or 25.0%) were filed against Information Technology companies, nine against Health Care, and five (or 12.5%) against Industrials. Utilities companies had no first-filed SCA cases filed against them.

Rule 10b-5 Litigation Exposure Industry Trends: In 4Q’24, the Financials sector had the highest U.S. SCA Rule 10b-5 Exposure per claim with $8.7 billion, followed by Consumer Discretionary with $3.6 billion. The Financials sector exhibited the highest exposure per alleged stock drop despite accounting for only six (9.4%) of all alleged corrective disclosures. Out of the 11 sectors, Utilities and Real Estate had zero U.S. SCA Rule 10b-5 Exposure. It is the second consecutive quarter with no exposure for Utilities.

Health Care has the highest number of alleged corrective disclosures filed against the sector with 15 (23.4%), closely followed by Information Technology with 14. Both sectors exhibited the highest and second highest number of allegedly fraud-related corporate disclosures in 3Q’24, indicating continued vulnerability of disclosure adequacy in those sectors.

3: U.S. SCA Rule 10b-5 Exposure by Industry Sector in 4Q’24

SCA RULE 10b-5 EXPOSURE OF U.S. LARGE CAP CORPORATIONS

x

Large Cap SCA Rule 10b-5 Exposure Amounted to $90.0 Billion During the Fourth Quarter of 2024

The average aggregate market capitalization of U.S. Large Cap corporations, based on the market capitalization range of the S&P500 Index during 4Q’24, was approx. $58.4 trillion.xi This is an increase of approximately 4.3% relative to 3Q’24. The return of the S&P 500 Index between October 1, 2024 and December 31, 2024 was 2.41%.

U.S. Large Cap Rule 10b-5 Litigation Exposure: U.S. Large Cap litigation exposure accounts for 86.1% of the aggregate market capitalization losses alleged against U.S. Issuers, and 41.2% of the global quantum. Observed filings and Rule 10b-5 exposure of U.S. Large Caps decreased compared to the preceding quarter by 19.0% and 37.4%, respectively. The decrease in exposure is driven by a 1.2% decrease in alleged market capitalization losses per alleged stock drop against U.S. Large Caps.

U.S. Large Caps exhibited $5.3 billion in statistically significant market capitalization losses per Exchange Act claim. This is a decrease of 22.6% relative to the preceding quarter. During the preceding twelve months, the mean market capitalization losses per Exchange Act SCA amounted to $6.5 billion.

U.S. Large Caps exhibited $3.5 billion in statistically significant market capitalization losses per alleged stock drop. This is a decrease of 1.2% relative to the preceding quarter. During the preceding twelve months, the mean market capitalization per alleged stock drop amounted to $3.4 billion.

SCA

10b-5

Mid Cap SCA Rule 10b-5 Exposure Amounted to $11.3 Billion During the Fourth Quarter of 2024

The average aggregate market capitalization of U.S. Mid Cap corporations, based on the market capitalization range of the S&P MidCap 400 Market Index during 4Q’24, was $1.3 trillion, a decrease of 4.8% from the prior quarter. xiii The return of the S&P MidCap 400 between October 1, 2024 and December 31, 2024 was 0.34%.

$11.3B

U.S. Mid Cap Rule 10b-5 Litigation Exposure: Private Rule 10b-5 litigation exposure of U.S. Mid Caps accounts for 10.8% of the aggregate market capitalization losses alleged against U.S. Issuers, and 5.2% of the global quantum. Compared to the preceding quarter, U.S. Mid Cap Litigation Exposure’s contribution to the aggregate market capitalization losses almost doubled from 5.5% in 3Q’24 to 10.8% in 4Q’24. Filing frequency dropped by 30.8% compared to 3Q’24 despite the increase in Mid Cap exposure.

Table 5: Mid Cap SCA Rule 10b-5 Exposure of U.S. Issuers

U.S. Mid Caps exhibited $1.3 billion in statistically significant market capitalization losses per Exchange Act claim. This is an increase of 91.8% relative to the preceding quarter. During the preceding twelve months, the mean market capitalization losses per Exchange Act SCA amounted to $696.6 million.

U.S. Mid Caps exhibited $705.3 million in statistically significant market capitalization losses per alleged stock drop. This is a material increase of 173.9% relative to the preceding quarter. During the preceding twelve months, the mean market capitalization per alleged stock drop amounted to $378 million.

SCA RULE 10b-5 EXPOSURE OF U.S. SMALL CAP CORPORATIONS

Small Cap SCA Rule 10b-5 Exposure Amounted to $3.3 Billion During the Fourth Quarter of 2024

The average aggregate market capitalization of U.S. Small Cap corporations, based on the market capitalization range of the S&P SmallCap 600 Market Index during 4Q’24, was approx. $720 billion, a decrease of about 5.3% relative to 3Q’24.xv The return of the S&P SmallCap 600 Index between October 1, 2024 and December 31, 2024 was -0.6%.

0.46% $3.3B

U.S. Small Cap Rule 10b-5 Litigation Exposure: U.S. Small Cap litigation exposure accounts for 3.2% of the aggregate market capitalization losses alleged against U.S. Issuers, and 1.5% of the global quantum. Relative to the preceding quarter, Private Rule 10b-5 litigation exposure increased from 2.6 billion to 3.3 billion, a 27.4% increase. The increase in quarter-over-quarter exposure comes despite a 5.3% decrease in the average aggregate market capitalization of U.S. Small Cap.

Table 6: Small Cap SCA Rule 10b-5 Exposure of U.S. Issuers

U.S. Small Caps exhibited $236 million in statistically significant market capitalization losses per Exchange Act claim. This is an increase of 9.2% relative to the preceding quarter. During the preceding twelve months, the mean market capitalization losses per Exchange Act SCA amounted to $233.4 million.

U.S. Small Caps exhibited $150 million in statistically significant market capitalization losses per alleged stock drop. This represents an increase of 79.5% relative to the preceding quarter. During the preceding twelve months, the mean market capitalization per alleged stock drop amounted to $133 million.

ADR SCA Rule 10b-5 Exposure Amounted to approx. $114 Billion

During the Fourth Quarter of 2024

U.S. exposure to Rule 10b-5 private securities-fraud litigation of Non-U.S. Issuers increased significantly by 16.2x during 4Q'24 relative to the preceding quarter. During the preceding twelve months, the aggregate market capitalization of NonU.S. Issuers peaked in 3Q'24 at $30.3 trillion, followed by $30.1 trillion in 4Q'24.xvi Rule 10b-5 private securities-fraud exposure and litigation rates of Non-U.S. Issuers exhibited a significant increase to 0.38% and 0.30%, respectively. Both figures are the highest on record since SAR began tracking Non-U.S. Issuer exposure in 1Q’20.

SAR analyzed six securities claims against Non-U.S. issuers that were sued for alleged Non-U.S. Issuer Rule 10b-5 exposure violations of the Exchange Act in 4Q’24.xvii ADR SCA Rule 10b-5 Exposure (alleged market capitalization losses based on statistically significant residual stock price returns) of non-U.S. Issuers to claims that allege violations of the Exchange Act amounted to $113.9B.xviii

Non-U.S. Issuer Rule 10b-5 Litigation Exposure: Quarter-over-quarter litigation exposure volatility against Non- U.S. Issuers continues. ADR SCA Rule 10b-5 Exposure in 4Q’24 increased by 16.2x compared to the preceding quarter. Exposure is driven by two main factors. First, there was a 100% increase in observed filing frequency from three in 3Q’24 to six in 4Q’24, a level not seen since 2Q’23. Second, the record-breaking exposure of Non-U.S. Issuers is driven by the magnitude of the stock drops alleged in two SCAs: City of Hollywood Firefighters' Pension Fund v. ASML Holding N.V. et al and Jeries Saleh v. AstraZeneca PLC et al. The former amounts to $74.2 billion and the latter to $31.3 billion in market capitalization losses allegedly tied to violations of Rule 10b-5.

The SAR Risk Score℠ for ASML, on the trading day prior to the case being filed, was 58%. SAR Risk Score℠ is equal to the market capitalization losses observed on High-Risk Adverse Corporate Events (ACEs) during a two-year period from the designated evaluation date divided by the issuers’ market capitalization as of the preceding trading day.

ADR Rule 10b-5 Exposure for Non-U.S. Issuers

Rule 10b-5 Claim Deficiencies Against Non-U.S. Issuers: Filings against Non-U.S. issuers in 4Q’24 had a high degree of econometric significance.

Table 8: Econometric Summary of Residual Stock Price Reaction to Plaintiffs' Alleged Corrective Disclosures

[1] First-filed and analyzed SCA complaints that allege violations of Rule 10b-5 against non-U.S. issuers that trade on U.S. exchanges through ADRs. Excludes U.S. issuers.

[2] The total number of alleged corrective disclosures identified in the sample of SCA complaints.

The

[4] The ratio of the number of alleged corrective disclosures that do not

disclosures. ([4] = [3] / [2]).

EMPIRICAL RESULTS OF RULE 10b-5 SETTLEMENT ESTIMATES

Empirical Results of Estimates of Maximum Potentially Available Rule 10b-5 Aggregate Damages

The results of our on-going independent, empirical analyses on SCA Rule 10b-5 settlements indicate that SAR’s Estimates of Maximum Potentially Available Rule 10b-5 Aggregate Damages continue to be statistically robust determinants of potential settlement amounts using a single explanatory variable.

Our empirical results demonstrate that our Estimates of Maximum Potentially Available Rule 10b-5 Aggregate Damages (calculated around the time when the corresponding securities class action complaints are filed) alone explains approximately 58% of the variation in settlement amounts in simple univariate regressions.xix Our results exhibit highly significant coefficient estimates indicating that a 10% increase in potential aggregate damages predicts an approximate 5.7% increase in the settlement amount. These results are robust and significantly more accurate than proxy-style damages estimates.xx

A proxy for damages claimed by investor plaintiffs may not be an accurate determinant in predicting Rule 10b-5 settlement outcomes because it does not apply the court-accepted event study methodology to effectively compute potential damages per share on a claim-specific basis.

$Ms Log Rule 10b-5 Settlements to Max. Potential Damages

R2 = 0.58

Max. Potentially Available Rule 10b-5 Aggregate Damages

When we add additional controls for the U.S. exchange, circuit court, and the plaintiff firm that represents the lead plaintiff, our Estimates of Maximum Potentially Available Rule 10b-5 Aggregate Damages can explain approximately 75% of Rule 10b-5 settlement variation as reported by the R-squared measure, and approximately 63% by the adjusted R-squared measure, with the damage’s coefficient indicating that a 10% increase in estimated damages predicts an approximate 4.9% increase in the settlement amount.

Data Science Key Takeaway: Throughout 2024, the r-squared and explanatory power of SAR's Estimate(s) of Maximum Potentially Available Rule 10b-5 Aggregate Damages metric has increased by four percentage points. It is conclusively a uniquely robust and powerful metric for forecasting settlements.

Rule 10b-5 Private Securities-Fraud Litigation Settlement Rates

Based on our robust empirical results on 204 settled Rule 10b-5 SCAs filed since June 2018, we computed the median settlement rates by taking the median quotient of claim-specific settlement amounts (as reported by Institutional Shareholder Services Securities Class Action Services) and our proprietary estimates of Maximum Potentially Available Rule 10b-5 Aggregate Damages.

SAR estimates and tracks quarterly Rule 10b-5 Exchange Act median settlement rates to estimate more accurate potential settlement outcomes on a claim-specific basis. Estimates of Maximum Potentially Available Rule 10b-5 Aggregate Damages are categorized into severity bands based on the magnitudes of claim-specific loss severity.

Table 9: SCA Rule 10b-5 Settlement Rates

The seven severity band ranges are based on SAR’s clustering analyses of our aggregate severity data and the relative frequency of complaints according to magnitude of estimated damages severity. The median settlement ranges of the bands are statistically distinct. We expect to further refine and add severity band ranges as our ratio population of settlement dollars to our Rule 10b-5 damages estimates expands and our statistical clustering analysis indicates meaningful distinction.

SAR Data Science Key Takeaway: The number of tracked claims with very large Estimate(s) of Maximum Potentially Available Rule 10b5 Aggregate Damages and associated settlements has grown large enough that SAR has further bifurcated the top Severity Band Rank, creating a new band for claims with estimated potential severity between $500 million and a billion dollars. Our clustering analysis, based on differences in estimated severity and settlements, supports this analysis, and the expected decrease in the settlement band ratio between the 6th band and 7th band is clear.

PLAINTIFF SECURITIES

SAR presents this data and analysis to identify the leading cohort of top performing plaintiff securities class action law firms. To objectively evaluate plaintiffs’ counsel performance in a dynamic legal landscape, SAR utilized two sets of performance criteria to achieve a simple, yet robust, data-driven evaluation.

The first performance selection criteria is the frequency of attaining lead or co-lead counsel. The second is the aggregate settlement value on all settled cases in which a firm participated as lead, co-lead, liaison counsel, or additional counsel. This data is value-relevant to supplement a holistic evaluation of the magnitude of potential loss severity on active SCAs that allege violations of the Exchange Act according to the plaintiff law firms involved.

Primary Performance Factor: Frequency of Attaining Lead or Co-Lead

The Federal Judiciary has the power to assign lead or co-lead counsel privileges according to well-defined case precedent in the private enforcement regime of federal securities laws. To appoint the lead and/or co-lead law firms, the Courts place significant emphasis on the magnitude of trading losses allegedly caused by plaintiffs’ alleged securities fraud against issuers. Achieving lead or co-lead status on any federal securities class action assures the law firm(s) control over leadership, strategy, management, and most importantly – the percentage of the settlement fee award.

Most courts consider: "(1) the total number of shares purchased during the class period; (2) the net shares purchases during the class period (in other words, the difference between the number of shares purchased and the number of shares sold during the class period); (3) the net funds expended during the class period (in other words, the difference between the amount spent to purchase shares and the amount received for the sale of shares during the class period); and (4) the approximate losses suffered." ... While courts differ on the precise weight to apply to each factor, most courts agree that the fourth factor—the approximate losses suffered—is the most salient factor in selecting the lead plaintiff.

The magnitude of trading losses of the proposed lead plaintiff is a significant driver in the court’s selection criteria to decide which law firm(s) will ultimately lead the consolidated action. As a result, SAR’s primary performance selection criteria is the frequency of attaining lead or co-lead as determined by the Federal Judiciary.

Table 10 to the right presents the top ten plaintiff securities class action law firms that exhibited the highest frequency of attaining lead or co-lead counsel in securities class actions that alleged violations of Rule 10b-5 during the preceding six years.

Secondary Performance Factor: Aggregate Settlement Amount on Participating Actions

The effectiveness of economic redress for allegedly defrauded investors in U.S. public companies is regularly evaluated based on the magnitude of aggregate settlements achieved by the participating law firms. As a result, SAR’s secondary performance selection criteria is the magnitude of aggregate settlements achieved by the participating law firms, whether or not they secured lead or co-lead status in the corresponding lawsuits.

Table 11 below presents the results of the top ten plaintiff securities class action law firms that exhibited the greatest aggregate settlements in SCAs that alleged violations of Rule 10b-5 during the preceding six years.

Table 11: Plaintiff Law Firm Aggregate Settlement Rankings

Aggregate Settlement Rankings: Half of all 10 plaintiff law firms that made the ranking based on aggregate settlements did not achieve Top 10 status on attaining lead or co-lead counsel appointments. This represents a 150% increase compared to the preceding quarter, where only two law firms broke into the Settlement Rankings but failed to meet the Primary Performance Factor.

Selection of Top Performing Plaintiff Securities Class Action Law

Selection of the top performing plaintiff securities class action law firms involved identifying those with both the highest frequency of attaining lead and co-lead counsel and achieved the greatest aggregate settlement amounts on the sample of cases analyzed.

Table 12 below presents the top plaintiff securities class action law firms identified according to SAR’s two sets of performance criteria. These law firms had the highest frequency of securing lead or co-lead status and achieved the greatest monetary recompense due to allegedly defrauded investors. This table ranks the law firms according to average settlement among 204 settled SCAs.

Table 12: Top Performing Securities Class Action Plaintiff Law Firms

Top Performing Plaintiff Securities

Class Action Law Firms:

Based on SAR’s performance criteria, the top performing law firm in 4Q’24 is Bernstein Litowitz Berger & Grossmann. Its aggregate settlement increased 1.8% from $2,189.1 to $2,229.1 while its average Rule 10b-5 settlements decreased from $95.2 to $92.9, a 2.4% reduction. Bernstein Litowitz Berger & Grossmann has an average settlement that is approximately $21.0 million more than the second ranked firm. Kessler Topaz Meltzer & Check, the top performing firm in 3Q’24, dropped from the ranking due to lower frequency of attaining lead or co-lead counsel.

SHORT-SELLER RESEARCH RELIANCE

SCA Rule 10b-5 Litigation Exposure Tied to Short-Seller Research Increased by 50% in 2024 to $20.5 Billion

Alleged market capitalization losses against both U.S. and NonU.S. issuers in Exchange Act claims that rely on short-seller research amounted to approx. $13.6 billion and $20.5 billion in 2023 and 2024, respectively.

Investor plaintiffs’ alleged market capitalization losses in private Rule 10b-5 securities-fraud class actions that relied on short-seller research against defendant issuers has accounted for approximately 3% of the global quantum during the last two years. In the fourth quarter alone, shareholders filed seven Rule 10b-5 Exchange Act claims that rely on short-seller research amounting to approx. $10 billion in alleged market capitalization losses.

Out of the 17 first-filed SCAs that relied on short-seller research in 2023, 12 (70.6%) SCAs had their first alleged stock drop triggered by a short-seller report. This percentage increased to 95.2% in 2024 (20 out of 21 first-filed SCAs). Data and analysis indicate that the corresponding alleged market capitalization losses associated with SCAs in which the first alleged stock drop was triggered by a short-seller report also increased between 2023 and 2024. In 2023, approx. $7.1 billion (52.3%) of the market capitalization losses claimed against defendant issuers were triggered by the publication of a short-seller report. In 2024, market capitalization losses triggered by a short-seller increased to approx. $19.6 billion (95.4%).

Table 14 provides the Top 5 Plaintiff Law Firms that relied on short-seller research. In 2024, Glancy Prongay & Murray LLP topped the charts with seven filed SCAs. The Law Offices of Frank R. Cruz and The Rosen Law Firm, P.A followed with five and four short-seller-based filings in 2024, respectively. Data and analysis indicate that in 2023 and 2024, Hindenburg Research was the short-seller relied on the most by investor plaintiffs to sue directors and officers for fraud-on-the market claims. In 2024, Hindenburg Research accounted for 22.7% of all short-seller reports referenced in Rule 10b-5 Exchange Act filings.

Table 14: Top 5 Plaintiff Law Firms that relied on Short-Seller Research

iGlobal SCA Rule 10b-5 Exposure amounts to the sum of U.S. Rule 10b-5 Exposure and ADR Rule 10b-5 Exposure estimates.

iiThis tally accounts for U.S. issuers of common stock and non-U.S. issuers that trade on U.S. exchanges through ADRs that are listed as defendants in first-filed SCA complaints filed during the fourth quarter of 2024 and allege shareholder damages. It also accounts for claims against such issuers in which Rule 10b-5 allegations were first made in amended filings during 4Q’24. A corporation that was sued a second or third time during the current quarter in non-amended filings is not accounted for in the current quarter’s tally. The tally excludes SCA complaints that were identified but not analyzed per Appendix-1

iiiFigures of Securities Class Action (SCA) Rule 10b-5 litigation exposure are based on identified and analyzed first-filed complaints for each claim filed during the corresponding quarter. They also include claims in which Rule 10b-5 allegations were first made in amended filings during the corresponding quarter. All federal SCA complaints are read by full-time human employees of SAR and screened for allegations that specifically allege violations of Rule 10b-5, define a specific Class Period, identify specific alleged misrepresentations, and allegedly related corrective disclosures. Proprietary non-ML and non-AI cloud-based technology is utilized and relied upon to capture, categorize, and database select constituent data components from each individual SCA complaint. Only the claimed stock price declines presented in the first-filed complaint against each defendant company are accounted for to estimate U.S. SCA Rule 10b-5 Exposure in this report. Measures of SCA exposure for each claim may increase or decrease as the case progresses through the class action life cycle. For purposes of this quarterly informative report, SCA Rule 10b-5 Exposure is not amended retroactively for cases that have been dismissed by the Court or voluntarily dismissed by plaintiffs.

ivThis tally accounts for U.S. issuers of common stock that are listed as defendants in first-filed SCA complaints filed during the fourth quarter of 2024 and allege aggregate shareholder damages. It also includes claims in which Rule 10b-5 allegations were first made in amended filings during 4Q’24. A U.S. issuer of common stock that was sued a second or third time during the current quarter in non-amended filings is not accounted for in the current quarter’s tally. The tally excludes SCA complaints against U.S. issuers of common stock that were sued for alleged violations of the federal securities laws in a previous quarters. The tally also excludes cases that have been filed against international corporations that are listed on U.S. exchanges through American Depositary Receipts (ADRs). The tally excludes SCA complaints that were identified but not analyzed per Appendix-1

vA public corporation’s exposure to alleged violations of Rule 10b-5 is estimated by tracking the cumulative decline in market capitalization during a single market trading session (close-to-close event windows) that correspond with the timing of the claimed alleged corrective disclosures that surpass statistical thresholds of indirect price impact at the 95% confidence standard and are presented in a first–filed SCA complaint. See, Halliburton III 309 F.R.D. 251 (N.D. Tex. July 25, 2015) and Exxon 2023 WL 5415315 (N.D. Tex. Aug. 21, 2023). This figure excludes market capitalization declines of non-U.S. issuers that have been sued for alleged violations of the U.S. federal securities laws and trade on U.S. exchanges through American Depositary Receipts (ADRs).

viSAR relies on Docket Alerts and Court Wire notifications attained from Thomson Reuters Westlaw. SAR professionals actively monitor and track case dockets to attain newly filed and amended SCA complaints.

viiThis tally of alleged corrective disclosures includes those from SCA complaints first-filed in 4Q’24 and amended filings in which Rule 10b-5 allegations were first made in 4Q’24 against U.S. issuers of common stock. The tally excludes SCA complaints against companies for which there are relevant first-filed complaints in prior quarters.

viiiSee, Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014); Erica P. John Fund, Inc. v. Halliburton Co., 309 F.R.D. 251 (N.D. Tex. 2015); Goldman Sachs Group Inc. v. Arkansas Teacher Retirement System, 141 S. Ct. 1951 (2021); Arkansas Teacher Retirement System v. Goldman Sachs Group, Inc., 77 F.4th 74 (2d Cir. 2023).

ixSee, Dura Pharmaceuticals, Inc. v. Broudo, No. 03-932, 2005 WL 885109 (2005).

xLarge cap corporations are the sub-set of defendant corporations that have market capitalizations within the range of the greatest and least market capitalization value of the constituent members of the S&P 500 Market Index at the time of the start of the Class Period alleged in the first-filed complaint.

xiThis is the average total market capitalization of U.S. issuers of common stock that are listed on the NYSE or Nasdaq exchanges with market capitalizations greater than $3.7 billion between October 1, 2024 and December 31, 2024.

xiiMid cap corporations are the sub-set of defendant corporations that have market capitalizations within the range of the greatest and least market capitalization value of the constituent members of the S&P MidCap 400 Market Index at the time of the start of the Class Period alleged in the first-filed complaint.

xiiiThis is the average total market capitalization of U.S. issuers of common stock that are listed on the NYSE or Nasdaq exchanges with market capitalizations between $1.26 and $3.7 billion between October 1, 2024 and December 31, 2024.

xivSmall cap corporations are the sub-set of defendant corporations that have market capitalizations within the range of the greatest and least market capitalization value of the constituent members of the S&P SmallCap 600 Market Index at the time of the start of the Class Period alleged in the first-filed complaint.

xvThis is the average total market capitalization of U.S. issuers of common stock that are listed on the NYSE or Nasdaq exchanges with market capitalizations less than $1.26 billion between October 1, 2024 and December 31, 2024.

xviFigures of ADR Securities Class Action (SCA) Rule 10b-5 Exposure are based on both first-filed and analyzed complaints for each claim filed during the corresponding quarter and claims in which 10b-5 allegations were first made in amended filings during the corresponding quarter.

xvii This tally includes both SCA complaints against non-U.S. issuers that trade on U.S. exchanges first-filed in the current quarter and claims in which Rule 10b-5 allegations were first made in amended filings during the current quarter. A non-U.S. issuer of ADRs that was sued a second or third time during the current quarter is not accounted for in the current quarter’s tally. The tally excludes SCA complaints that were identified but not analyzed per Appendix-1

xviiiA non-U.S. issuer’s exposure to alleged violations of Rule 10b-5 is estimated by tracking the cumulative decline in market capitalization during open market trading sessions that correspond with the timing of the claimed alleged corrective disclosures that surpass statistical thresholds of indirect price impact and are presented in a first-filed SCA complaint.

xixThese results are based on a sample of 204 recently settled SCAs, and exclude settled SCAs that allege violations of both the Exchange Act and Securities Act. These specific performance metrics are based on log-log regressions that exclude the few settled cases for which Estimates of Maximum Potentially Available Rule 10b-5 Aggregate Damages are zero, due to all of the alleged stock drops exhibiting a non-statistically significant residual stock price decline at the 95% confidence standard and greatly prohibiting the determination of back-end stock price impact, in accordance with the Supreme Court ruling, in Arkansas Teachers Retirement System v. Goldman Sachs, made effective June 21, 2021. Non log-log regressions that include these fully deficient securities claims that settled for a monetary sum perform similarly in terms of their explanatory power.

xxThe applied methodology for accumulating maximum potential alleged artificial inflation that investors claim is embedded in the defendant’s price of common stock, is the industry-accepted constant dollar method. Aggregate market data supplied by S&P Global Market intelligence is used to compute an appropriate level of daily effective float by taking into consideration and accounting for the effects of insider holdings and short interest on a daily basis throughout the corresponding class period based on the allegations of the corresponding class action complaint. For purposes of this informative quarterly report, no reduction to issue-specific float is made to account for institutional investor trading volume that may not be affected by and during investor plaintiffs alleged class period. A refined estimate of effective float may be computed in a litigation-specific context to control for institutional holdings that may not warrant inclusion in the estimation of the defendant’s effective float for a more accurate estimation of Maximum Potentially Available Rule 10b-5 Aggregate Damages. An adjustment to exchange-reported trading volume is made to account for common stock traded by designated market-makers or broker dealers who are acting as market-makers. Other specific refinements to exchange-reported volume may be made in a litigation-specific context based on data attained through discovery, for example when tracing issues may be present. The estimation of allegedly damaged shares during the operative class periods are made by applying a pre-calibrated, and industry-accepted two-trader model with static model inputs for each of the respective investor cohorts. The use of an industry-accepted quantitative model is a widely accepted technique used in securities class action litigation by established Plaintiff and Defense experts to estimate the number of alleged and potentially damaged shares because class counsel may not have the ability to attain the entire universe of trading records of all participants in the market that bought and sold publicly traded common stock of the corresponding share class in the U.S.-listed company during investor plaintiffs alleged inflationary period. The Estimate of Maximum Potentially Available Rule 10b-5 Aggregate Damages is based on the attribution of 100% of the residual stock price decline for each alleged corrective disclosure that exhibited a statistically significant residual stock price decline at the 95% confidence standard and using a close-to-close, single trading session event window. The limitation to maximum potentially attributable artificial stock price inflation that investor plaintiffs allege to be embedded in the price of common stock may be refined in litigation-specific circumstances based on the results of news discovery analyses to determine the magnitude of potential confounding information disclosed to participants in the market on the affected day. The Estimate of Maximum Potentially Available Rule 10b-5 Aggregate Damages applies Section 21D(e) of the Private Securities and Litigation Reform Act of 1995 (PSLRA) 90-day look-back limitation on damages on the final alleged corrective disclosure that exhibited a statistically significant residual stock price decline at the 95% confidence standard and using a close-to-close, single trading session event window. In a litigation-specific circumstance, the 90-day look-back limitation to aggregate damages may applied and extended on all surviving alleged corrective disclosures that may exhibit back-end price impact which may further reduce the Estimates of Maximum Potentially Available Rule 10b-5 Aggregate Damages.

Appendix-1: Rule 10b-5 Exchange Act SCAs Identified But Not Analyzed in 4Q’24

The following list comprises Rule 10b-5 Exchange Act SCAs filed during 4Q’24 against U.S. issuers of common stock or ADRs but not analyzed by SAR due to two primary factors. Either there is insufficient pricing data to conduct a multivariate regression in accordance with SAR’s data analytics standards of quality control, and/or the securities claims allege potentially novel theories of Rule 10b-5 liability.

Sources: ISS SCAS, FINRA, S&P Global Market Intelligence, S&P Dow Jones Indices, Thomson Reuters, SAR Platform as of December 31, 2024.

Any reprint of the information or figures presented in this quarterly report should reference SAR. Please direct any technical inquiries to Stephen Sigrist, SVP of Data Science, at 202.891.3652 or stephen@sarlit.com.

SAR is a pioneer in public company risk management data analytics solutions. The company relies on specialized data science and court-approved methodologies to quantify the securities litigation risk of U.S. and non-U.S. issuers listed on the NYSE and NASDAQ.

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For any technical inquiries contact Stephen Sigrist, Senior Vice President of Data Science.

Stephen Sigrist

Senior Vice President 202.891.3652 stephen@sarlit.com

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