SAR Rule 10b-5 Exposure Report 1Q 2022

Global SCA Rule 10b-5 Exposure of Public Corporations that Issue Common Stock on U.S. Exchanges amounted

i

to $335.8 Billion in 1Q’22

29 public corporations that trade on U.S. Exchanges were sued for alleged violations of the federal securities laws under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) during 1Q’22.ii

Global SCA Rule 10b-5 Exposure of U.S.-listed corporations increased significantly by $236 billion in 1Q’22, or 235% relative to 4Q’21. Approx. $16.1 billion, or 4.6% of alleged global shareholder losses (claimed market capitalization losses), do not surpass statistical thresholds of back-end stock price impact and may not translate into alleged classwide shareholder damages.

Without discounting the effects of price impact deficiencies, global alleged shareholder losses in 1Q’22 amount to $351.9 billion.

1Q’22 exhibited Global SCA Rule 10b-5 Exposure amounting to $335.8 billion, which is more than three times the amount estimated in 4Q’21.

U.S.

SCA

Rule 10b-5 Exposure of U.S. Issuers Increased to $306B in 1Q’22 from $96.4B in 4Q’21iii

26 U.S. issuers were sued for alleged violations of the Exchange Act and Rule 10b-5 during 1Q’22.iv

U.S. SCA Rule 10b-5 Exposure of directors and officers of U.S. issuers to claims that allege violations of the Exchange Act amounts to $306 billion.v

Approximately $12.2 billion, or 3.8% of alleged shareholder losses (claimed market capitalization losses), do not surpass statistical thresholds of back-end stock price impact and may not translate into alleged classwide shareholder damages. Without discounting the effects of price impact deficiencies, alleged shareholder losses against U.S. issuers in 1Q’22 amount to $318.2 billion.

Table 1: U.S. SCA Rule 10b-5 Exposure of U.S. Issuers

Analyzed frequency decreased by 16% in 1Q’22 relative to 4Q’21 (See Appendix-1). U.S. SCA Rule 10b-5 Exposure increased materially by 218% relative to 4Q’21. 1Q’22 exemplifies the need for D&O industry practitioners to focus on market capitalization dollars at stake (SCA exposure) vis-à-vis solely on frequency to model potential severity more accurately. The U.S. SCA Rule 10b-5 Exposure Rate increased by 40 basis points in 1Q’22 to 0.59% and far exceeds the 0.10% prior year average. U.S. SCA Rule 10b-5 Litigation Rate decreased by 14 basis points from 0.75% in 4Q’21 to 0.61% in 1Q’22. *26 excludes 13 claims filed in 1Q’22 that SAR identified but did not analyze. See Appendix-1.

Table 2: : Back-end Price Impact Summary of Alleged Corrective Disclosures

of U.S. Issuers

During 1Q’22, SAR analyzed 40 first-filed “stock-drop” SCAs filed against U.S. issuers that allege violations of Rule 10b-5 via 75 claimed corrective or truth-revealing disclosures or events.vi After consolidating cases with seemingly related allegations against individual U.S. issuers, SAR accounted for 26 filed SCAs. A total of 47 corrective disclosures have been alleged in the 26 firstfiled SCAs.vii

Of the 47 corrective disclosures alleged during 1Q’22, 20 (43%) may not translate to alleged classwide shareholder damages since they do not warrant inclusion in a certified class of proposed shareholders (Goldman) as they do not surpass statistical thresholds of back-end price impact (Halliburton II). These alleged stock drops also run afoul

of the heightened pleading standards of loss causation (Dura) because they lack statistical significance to warrant potential damages after excluding non-company specific factors.viii

The number of alleged stock drops decreased from 55 in 4Q’21 to 47 in 1Q’22, a decrease of 14.5%. There was an increase in the number of alleged stock drops that do not exhibit price impact, from 18 in 4Q’21 to 20 in 1Q’22. 43% of alleged corrective disclosures claimed in first-filed complaints analyzed in 1Q’22 do not exhibit price impact. The shareholder value of these stock drops - as calculated by the corresponding single-day alleged market capitalization losses – increased by three and half times from $3.5 billion in 4Q’21 to $12.2 billion in 1Q’22.ix

SCA RULE 10b-5 EXPOSURE BY INDUSTRY SECTOR

95% of U.S. Rule 10b-5 Exposure in 1Q’22 Was Driven by SCAs Against Software Companies.

Out of the 26 SCAs filed in 1Q’22, 7 (or 27%) were filed against Pharma/Biotech companies, and 4 against each of the Software, Health Care, and Electronics/ Hardware/Semiconductor industry sectors. The sector with the greatest SCA Rule 10b-5 Exposure was Software, which accounted for 95% of the U.S. SCA Rule 10b-5 Exposure amounting to $292 billion. This is a record-setting exposure for any single industry sector since SAR has been tracking industryspecific SCA Exposure data.

Data and analyses indicate that the industry sector that was impacted most by alleged market capitalization losses that may not surpass statistical thresholds of back-end price impact is Pharma/Biotech. $11.9 billion of the total $13.7 billion in claimed market capitalization losses in this sector may not translate into potential alleged shareholder damages due to verifiable absence of back-end price impact.

*26 excludes 13 claims filed in 1Q’22 that SAR identified but did not analyze. See Appendix-1.

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

U.S. Large Cap SCA Rule 10b-5 Exposure Increased by 240% – from $89 Billion in 4Q’21 to $302 Billion in 1Q’22.

SCA exposure and potential severity increased materially in 1Q’22. Large Cap SCA Rule 10b-5 Exposure increased 240% relative to 4Q’21, amounting to $302 billion. Estimated SCA exposure excludes any market capitalization losses from 7 SCAs filed against Large Caps that were not analyzed by SAR. (See Appendix-1.) Data and analyses indicate that the increase in magnitude of potential severity in SCAs filed against large caps in 1Q’22 has never been exhibited since SAR began tracking this data in 3Q’18.

The average aggregate market capitalization of U.S. large cap corporations, based on the market capitalization range of the S&P500 Index during 1Q’22, was $49.44 trillion. This is an increase in aggregate market cap of $550 billion, or 1.12%, relative to 4Q’21.

Large Cap SCA Rule 10b-5 Exposure Rate increased by a material 43 basis points to 0.61% in 1Q’22. The Large Cap SCA Rule 10b-5 Litigation Rate decreased from 1.30% in 4Q’21 to 1.03% in 1Q’22; a decrease of 27 basis points.

The return of the S&P500 Index between January 1, 2022, and March 31, 2021 was -4.6%.

1Q’22

U.S. Large Cap Analysis: The big take-away here is a material increase in SCA exposure and potential severity given a slight decline in frequency. 1Q’22 exhibited the greatest Large Cap SCA Rule 10b-5 Exposure Rate since SAR began tracking the data in 3Q’18.

SCA RULE 10b-5 EXPOSURE OF U.S. MID CAP CORPORATIONSxii

U.S. Mid Cap SCA Rule 10b-5 Exposure Decreased by 75% in 1Q’22, Amounting to $452 Million.

2 mid cap corporations were sued for alleged violations of Rule 10b-5 during 1Q’22 – a quarterly decrease of 2 relative to 4Q’21. 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 1Q’22, was $1.62 trillion, a decrease of 2.67% relative to 4Q’21.

Mid Cap SCA Rule 10b-5 Exposure Rate decreased by 8 basis points relative to 4Q’21, amounting 0.03%. The Mid Cap Rule 10b-5 Litigation Rate also decreased in 1Q’22 to 0.28%; a decrease of 26 basis points relative to 4Q’21.

The return of the S&P MidCap 400 between January 1, 2022, and March 31, 2021 was -4.9%.

$1.36B 75% $0.5B 1Q’22 Mid Cap SCA Rule 10b-5 Exposure

to 4Q’21

Cap SCA Rule 10b-5 Exposure Rate

0.03% 1Q’22

1Q’22

1Q’22 U.S. Mid Cap Analysis: Mid Cap SCA filing frequency and Mid Cap SCA Rule 10b-5 Exposure Rate both decreased for a third consecutive quarter. SCA Exposure of $452 million for Mid Caps during 1Q’22 is the lowest SCA Exposure since SAR began tracking the data in 3Q’18.

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

xiv

U.S. Small Cap SCA Rule 10b-5 Exposure decreased relative to 4Q’21, Amounting to $3.3 Billion in 1Q’22.

The Small Cap SCA Rule 10b-5 Exposure in 1Q’22 amounted to $3.3 billion, which translates to a decline of 41% relative 4Q’21. Estimated SCA exposure excludes any market capitalization losses from 5 SCAs filed against Small Caps that were not analyzed by SAR. (See Appendix-1.)

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 1Q’22, was $854.8 billion, a slight decrease of 0.54% relative to 4Q’21.xv

In 1Q’22, the Small Cap SCA Rule 10b-5 Exposure Rate was 0.38%, which is 26 basis points lower relative to 4Q’21. The Small Cap Rule 10b-5 Litigation Rate decreased by 3 basis points to 0.51%.

The return of the S&P SmallCap 600 Index between January 1, 2022, and March 31, 2021 was -5.62%.

Small Cap SCA Rule 10b-5 Exposure

Small Cap SCA Rule 10b-5 Exposure Rate Relative to 4Q’21

$2.3B 41% $3.3B 1Q’22

Small Cap SCA Rule 10b-5 Litigation Rate 0.51% 1Q’22 0.38% 1Q’22

1Q’22 U.S. Small Cap Analysis: Small Cap SCA Rule 10b-5 Exposure declined by 41% relative to 4Q’21. The estimate of SCA exposure excludes market capitalization losses claimed against 5 small caps for which there was insufficient data to perform a robust multivariate regression analysis to evaluate the statistical significance of the residual returns related to the alleged stock drops.

3 non-U.S. issuers that trade on U.S. exchanges through ADRs were sued for alleged violations Exchange Act during 1Q’22.xvii

ADR SCA Rule 10b-5 Exposure of directors and officers of non-U.S. issuers to claims that allege violations of Rule 10b-5 under the Exchange Act related to these three claims amounts to a record-setting $29.8 billion in SCA exposure.xviiI

Approximately $3.9 billion of market capitalization declines that have been claimed as investor losses by a proposed class of common stock shareholders may not surpass statistical thresholds of back-end price impact and may not translate into alleged classwide shareholder damages. Without discounting the effects of price impact deficiencies, alleged shareholder losses against non-U.S. issuers amounts to $33.7 billion in 1Q’22.

In 1Q’22, the ADR SCA Rule 10b-5 Exposure Rate increased substantially relative to 4Q’21 at 0.10%. The ADR SCA Rule 10b-5 Litigation Rate also increased by 5 basis points relative to 4Q’21 to 0.15% based on the number of non-U.S. issuers that trade in the NYSE, NASDAQ, and over-the-counter in the U.S.

ADR SCA Rule 10b-5 Exposure

The ADR SCA Rule 10b-5 Exposure of nonU.S. issuers in 1Q’22 amounts to $29.8 billion, a Material Increase of ~700% Relative to 4Q’21.xvi $26B 696% $29.8B 1Q’22

ADR SCA Rule 10b-5 Exposure Rate Relative to 4Q’21 ADR SCA Rule 10b-5 Litigation Rate

1Q’22 ADR Analysis: Frequency of Rule 10b-5 SCAs against non-U.S. issuers increased by 1 in 1Q’22, but the related SCA exposure of the 3 defendant firms amounts $29.8 billion, the highest ADR SCA Rule 10b-5 Exposure amount since 4Q’20.

Table 8: Price Impact Summary of Alleged Corrective Disclosures of Non-U.S. Issuers

[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 total number of alleged corrective disclosures that do not exhibit a statistically significant one-day residual stock price return at the

Sources: S&P Global Market Intelligence, S&P Dow Jones Indices, Thomson Reuters, SAR SCA Platform as of March 31, 2022.

Any reprint of the information or figures presented in this quarterly report should reference SAR. Please direct any technical inquiries to Stephen Sigrist, VP of Data Science, at 202.891.3652 or stephen@sarlit.com. SAR is a software and data analytics company that actively tracks, monitors, and analyzes private securities fraud actions that allege violations of the Exchange Act of 1934.

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

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 2021 and allege shareholder damages. A corporation 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

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. All federal securities class action complaints are read and screened for allegations that specifically include alleged violations of Rule 10b-5 and define a specific Class Period. 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. Measures of SCA exposure for each claim may increase or decrease as the case progresses through the class action life cycle. SCA 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 2021 and allege shareholder damages. A U.S. issuer of common stock 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 against U.S. issuers of common stock that were sued for alleged violations of the federal securities laws in 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 single market trading sessions 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. This figure excludes market capitalization declines of non-U.S. issuers that have been sued for violations of the U.S. federal securities laws and trade on U.S. exchanges through American Depositary Receipts (ADRs).

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

viiThis tally of alleged corrective disclosures includes only those from first-filed SCA complaints identified and analyzed during 4Q 2021 against U.S. issuers of common stock. The tally excludes securities class action complaints against companies for which there are first-filed complaints in prior quarters.

viiiSee Goldman Sachs Group Inc. v. Arkansas Teacher Retirement System, No. 20-222 (2021), Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014), and Dura Pharmaceuticals, Inc. v. Broudo, No. 03-932, 2005 WL 885109 (2005).

ixA single-firm multivariate regression analysis with a minimum of 100 observations (if a full 252 observations is unattainable) for a Control Period is applied to evaluate the statistical significance of the logarithmic residual stock price decline on the trading day(s) affected by an alleged corrective disclosure(s) (or the alleged adverse event). Statistical significance is measured by computing the t-statistic of the residual stock price decline during the single trading session that is affected by the alleged corrective and/or truth-revealing information. The Control Period ends one trading day prior to the start of the Class Period presented in the corresponding securities class action complaint. Due to the proliferation of Rule 10b-5 claims made against companies involved in recent SPAC transactions, beginning in 2Q’21, a single-firm multivariate regression analysis is performed when sufficient pricing observations are available to support an adequate Control Period. If there are between 50 and 100 closing stock price observations before the first alleged corrective disclosure, the VP of Data Science determines whether the raw data sample is sufficiently robust to perform a multivariate regression analysis that surpasses econometric quality controls standards of SAR.

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 January 1st, 2021 and March 31st, 2022.

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 January 1st, 2021 and March 31st, 2022.

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 in that are listed on the NYSE or Nasdaq exchanges with market capitalizations less than $1.26 billion January 1st, 2021 and March 31st, 2022.

xviFigures of ADR Securities Class Action (SCA) Rule 10b-5 Exposure are based on the first-filed and analyzed complaint for each claim filed during the corresponding quarter. All federal securities class action complaints that comprise the data and analyses presented herein are read and screened for allegations that specifically include alleged violations of Rule 10b-5 and define a specific Class Period. Only the claimed stock price declines presented in the first filed complaint against each defendant company are accounted for to estimate ADR SCA Rule 10b-5 Exposure. Measures of SCA exposure for each claim may increase or decrease as the case progresses through the class action life cycle.

xviiThis tally only includes securities class action complaints against non-U.S. issuers that trade on U.S. exchanges through ADRs that were sued for alleged violations of the federal securities laws for the first time in 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.

Appendix -1: Rule 10b-5 Exchange Act Claims Identified But Not Analyzed in 1Q'22.

The following list comprises Rule 10b-5 Exchange Act SCAs filed during 1Q'22 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 cases of first impression that allege novel theories of Rule 10b-5 liability are not analyzed according to SAR’s standard operating procedures and quality control standards.