SAR Rule 10b-5 Exposure Report 3Q 2021

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

on U.S. Exchanges Increased to $38.7B in 3Q’21 from $30.5B in 2Q’21i

22 public corporations that issue common stock on U.S. Exchanges (“U.S. issuers”) 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 3Q’21.ii 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 $38.7 billion.iii Approximately $1.8 billion, or 4.3% of alleged shareholder losses (claimed market capitalization losses), do not surpass statistical thresholds of back-end stock price impact and may not translate into classwide shareholder damages. Without discounting the effects of back-end price impact, alleged shareholder losses in 3Q’21 amount to $40.4 billion.

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

While frequency of filings decreased by 29% in 3Q’21 relative to 2Q’21, U.S. SCA Rule 10b-5 Exposure increased by 26.8%, or $8.2 billion, relative to 2Q’21. The U.S. SCA Rule 10b-5 Exposure Rate increased by 2 basis points in 3Q’21 to 0.08%. U.S. SCA Rule 10b-5 Litigation Rate decreased by 26 basis points from 0.81% in 2Q’21 to 0.55% in 3Q’21.

COVID-19 U.S. SCA Rule 10b-5 Litigation Exposure: No Rule 10b-5 claims related to COVID-19 were filed in 3Q’21. The total SCA Rule 10b-5 Exposure related to COVID-19 since March 2020 amounts to $26.2 billion.

Table 2: Back-end Price Impact Summary of Alleged Corrective Disclosures of U.S. Issuers

During 3Q’21, SAR accounted for 33 “stock-drop” SCAs filed against U.S. issuers that allege violations of Rule 10b-5 via 53 claimed corrective disclosures.iv After consolidating cases with seemingly related allegations against individual U.S. issuers, SAR accounted for 22 filed SCAs. A total of 32 corrective disclosures have been alleged in the 22 firstfiled SCAs.v Of the 32 corrective disclosures alleged during 3Q’21, 6 (19%) may not translate to 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 after excluding non-company specific effects.vi

The number of alleged stock drops decreased from 51 in 2Q’21 to 32 in 3Q’21, a decrease of 37.3%. The number of alleged stock drops that did not exhibit price impact decreased by more than two thirds, from 20 in 2Q’21, down to 6 in 3Q’21. That means that 19% of alleged corrective disclosures included in first-filed complaints in 3Q’21 do not exhibit price impact — the lowest amount since 3Q’19. The shareholder value of those drops - as calculated by the alleged market capitalization losses stemming from econometrically deficient alleged stock drops — decreased by nearly 60%, from $4.4 billion in 2Q’21 to $1.8 billion in 3Q’21. That is the lowest amount exhibited since 3Q’19.vii

SCA RULE 10b-5 EXPOSURE BY INDUSTRY SECTOR

Nearly Half of Rule 10b-5 Claims in 3Q’21 Were Filed Against Pharma/ Biotech Companies.

Out of the 22 SCAs filed in 3Q’21, 10 (or 45.5%) were filed against Pharma/ Biotech companies, 2 (or 9.1%) against Finance, Insurance, and Real Estate (F.I.R.E) companies, and 2 (or 9.1%) against Software companies. The sector with the greatest U.S. SCA Rule 10b-5 Exposure was the Software sector which accounted for 52.7% of the U.S. SCA Rule 10b-5 Exposure and amounts to $20.4 billion.

Data and analyses indicate that the industry sectors that were impacted most by alleged corrective disclosures that may not surpass statistical thresholds of back-end price impact are Health Care; Media; Retail and Consumer Products; and Pharma/ Biotech. 100% ($195.3 million) of shareholder losses alleged in the single SCA against a Health Care company did not exhibit stock price impact. 22% ($1.3 billion) of shareholder losses alleged in the single SCA filed against a Media company did not exhibit stock price impact. 8% ($213.3 million) of shareholder losses alleged the single SCA against a Retail and Consumer Products company did not exhibit stock price impact. 1% ($25.4 million) of shareholder losses alleged in the 10 SCAs against Pharma/Biotech companies did not exhibit stock price impact.

Table 3: U.S. SCA Rule 10b-5 Exposure by Industry Sector in 3Q’21

$739,086

$4,272,489

$1,598,561

$195,337

$45,680

$739,086

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

viii

Large Cap SCA Rule 10b-5 Exposure Increased to $33.3 Billion in 3Q’21, Nearly Doubling Relative to 2Q’21.

6 large cap corporations were sued for alleged violations of Rule 10b-5 during 3Q’21 – a decrease of 1 – relative to 2Q’21. The average aggregate market capitalization of U.S. large cap corporations, based on the market capitalization range of the S&P500 Index during 3Q’21, was $47.03 trillion. ix This is an increase in aggregate market cap of $2.14 trillion, or 4.8%, relative to 2Q’21. The greater increase in Large Cap Rule 10b-5 Exposure relative to the increase in the aggregate market cap led to an increase of the Large Cap SCA Rule 10b-5 Exposure Rate by 3 basis points to 0.07% in 3Q’21. The Large Cap SCA Rule 10b-5 Litigation Rate decreased from 0.64% in 2Q’21 to 0.51% in 3Q’21 — a drop of 13 basis points.

The return of the S&P500 Index between July 1, 2021 and September 30, 2021 was 0.58%.

$16.5B 98.0%

3Q’21 U.S. Large Cap Analysis: The Large Cap SCA Rule 10b-5 Exposure of $33.3 billion during 3Q’21 is up 98.1% from 2Q’21 with a single unit decline in frequency in 3Q’21 relative to 2Q’21. 3Q'21 exhibited the lowest Large Cap SCA Rule 10b-5 Litigation Rate since 1Q’19.

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

Mid Cap SCA Rule 10b-5 Exposure

$2.5B 3Q’21

Mid Cap SCA Rule 10b-5 Exposure had a Material Decrease of 70.0% in 3Q’21, Amounting to $2.5 Billion.

3 mid cap corporations were sued for alleged violations of Rule 10b-5 during 3Q’21 – a decrease of 3 – relative to 2Q’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 3Q’21, was $1.66 trillion, a small increase of 1.97% relative to 2Q’21.xi In 3Q’21, the Mid Cap SCA Rule 10b-5 Exposure Rate decreased to 0.15%. The Mid Cap Rule 10b-5 Litigation Rate decreased quarter-over-quarter to 0.43% — a drop of 42 basis points relative to 2Q’21.

The return of the S&P MidCap 400 between July 1, 2021 and September 30, 2021 was -1.76%.

Relative to 2Q’21 Mid Cap SCA Rule 10b-5 Litigation Rate

$5.9B 70%

Mid Cap SCA Rule 10b-5 Exposure Rate

3Q’21

3Q’21

3Q’21 U.S. Mid Cap Analysis: Mid Cap SCA filing frequency and Mid Cap SCA Rule 10b-5 Exposure Rate both decreased this quarter. The 3Q’21 Mid Cap SCA Rule 10b-5 Exposure amounted to $2.5 billion, a material decrease of 70.0% relative to 2Q’21. The Mid Cap Rule 10b-5 Litigation Rate decreased by 42 basis points relative to 2Q’21, resulting in the lowest Mid Cap SCA Rule 10b-5 Litigation Rate exhibited since 1Q’19.

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

$2,152,848 $2,380,893 $8,464,394 $2,539,543

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

xii

Small Cap SCA Rule 10b-5 Exposure Decreased by 46.0% in 3Q’21.

13 small cap corporations were sued for alleged violations of Rule 10b-5 during 3Q’21, which is 5 fewer than in 2Q’21. The Small Cap SCA Rule 10b-5 Exposure in 3Q’21 amounted to $2.8 billion, which is a decrease of 46.0% relative to 2Q’21.

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 3Q’21, was $842.6 billion — an increase of 5.26% relative to 2Q’21xiii In 3Q’21, the Small Cap SCA Rule 10b-5 Exposure Rate was 0.33%, which is 32 basis points lower relative to 2Q’21. The Small Cap Rule 10b-5 Litigation Rate also decreased by 29 basis points to 0.61.

The return of the S&P SmallCap 600 Index between July 1, 2021 and September 30, 2021 was -2.84%.

2Q’21 U.S. Small Cap Analysis: Small Cap SCA Rule 10b-5 Exposure decreased by nearly half relative to 2Q’21. Small Cap SCA Rule 10b-5 filing frequency also decreased, resulting in the lowest Small Cap Rule 10b-5 Exposure Rate and the lowest Small Cap Rule 10b-5 Litigation Rate of the past year.

The

ADR SCA Rule 10b-5 Exposure of nonU.S. issuers in 3Q’21 amounts to $4.0 billion, a Decrease of 44.0% Relative to 2Q’21.xiv

4 non-U.S. issuers that trade on U.S. exchanges through ADRs (“non-U.S. issuers”) were sued for alleged violations Exchange Act during 3Q’21.xv 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 amounts to $4.0 billion.xvi Approximately $0.4 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 classwide shareholder damages. Without discounting the effects of back-end stock price impact, claimed shareholder losses against directors and officers of non-U.S. issuers amounts to $4.4 billion in 3Q’21.

In 3Q’21, the ADR SCA Rule 10b-5 Exposure Rate decreased by 1 basis point to 0.01% relative to 2Q’21. The ADR SCA Rule 10b-5 Litigation Rate is 0.20% based on the number of non-U.S. issuers that trade in the NYSE, NASDAQ, and overthe-counter in the U.S, which is an increase of 5 basis points relative to 2Q’21.

ADR SCA Rule 10b-5 Exposure

ADR SCA Rule 10b-5 Exposure Rate Relative to 2Q’21

ADR SCA Rule 10b-5 Litigation Rate

3Q’21 ADR Analysis: Although the number of filings increased by 1 in 3Q’21, ADR SCA Rule 10b-5 Exposure of non-U.S. issuers decreased by 44.0% relative to 2Q’21. 22.2% of the alleged corrective disclosures in the 4 SCAs filed against non-U.S. issuers do not surpass statistical thresholds of back-end price impact. That amounts to $0.4 billion, or 7.8% of the claimed market capitalization losses that do not surpass statistical thresholds of stock price impact.

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

GLOBAL SCA RULE

Global SCA Rule 10b-5 Exposure of U.S.-listed corporations (including U.S. issuers of common stock and non-U.S. issuers that trade via ADRs) amounts to $42.7 billion in 3Q’21. That is an increase of $5.0 billion, or 13.3%, in global securities class action exposure to Rule 10b-5 private securities fraud litigation relative to 2Q’21.

Global SCA Rule 10b-5 Exposure

Sources: S&P Global Market Intelligence, S&P Dow Jones Indices, Thomson Reuters, SAR SCA Platform as of June 30th, 2021.

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.

iFigures of Securities Class Action (SCA) Rule 10b-5 litigation exposure are based on identified 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 have been dismissed by the Court or voluntarily dismissed by plaintiffs. iiThis tally accounts for U.S. issuers of common stock that are listed as defendants in first-filed SCA complaints that allege shareholder damages for alleged artificial inflation of stock price during the third quarter of 2021. 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 Exchange Act claims that allege an artificially depressed price of common stock, a novel damages theory (see for example, White Pine Investments v. CVR Refining, LP et al); and Exchange Act claims against Electronic Traded Funds (ETFs). The tally also excludes cases that have been filed against international corporations that are listed on U.S. exchanges through American Depositary Receipts (ADRs). SCAs that allege Class Periods and/or corrective disclosures for which insufficient historical pricing data exists to estimate alleged artificial stock inflation are also excluded from the tally (see for example, Skeels v. Piedmont Lithium Inc. et al., Ivan Baron v. HyreCar Inc. et al.)

iiiA public corporation’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. 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).

ivSAR 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 claims.

vThis tally of alleged corrective disclosures includes only those from first-filed SCA complaints identified during 3Q 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.

viSee 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).

viiA 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 trading session that is affected by the alleged corrective information. (If the t-statistic is greater than plus or minus 1.96, the likelihood that the daily residual return of the defendant company’s common stock could have been caused by random volatility is less than 5%.) 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 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 trading day 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 of SAR.

viiiLarge 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.

ixThis 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 July 1st, 2021 and September 30th, 2021.

xMid 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.

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 between $1.26 and $3.7 billion between July 1st, 2021 and September 30th, 2021.

xiiSmall 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.

xiiiThis 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 July 1st, 2021 and September 30th, 2021.

xivFigures of ADR Securities Class Action (SCA) Rule 10b-5 Exposure are based on the first filed 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.

xvThis 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. SCAs that allege Class Periods and/or corrective disclosures for which insufficient historical pricing data exists to estimate alleged artificial stock inflation are also excluded from the tally (see for example, Bonnie L. Franklin v. DiDi Global Inc. et al, Kostendt v. Oatly Group AB et al.)

xviA 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.

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

To learn more about how SAR data analytics services and data packages can enhance the complex claim resolution capabilities of your organization, please contact:

Carolina M. Doherty Vice President – Business Development

Direct: 202-926-4434

Email: carolina@sarlit.com