To deliver independent and high-quality public company risk management data analytics solutions to protect Directors & Officers by enhancing transparency in the securities class action arena
The analytical tabulations presented herein provide dedicated risk managers and investment professionals with robust transparency on the frequency and severity of Adverse Corporate Events to identify dispositive corporate disclosure trends that increase the likelihood of private securities-fraud litigation or enforcement actions brought by the Securities and Exchange Commission (“SEC”) against directors and officers and companies listed on the NYSE or NASDAQ. Analytical results on disclosure-specific information are based on close-to-close stock price performance relative to the general market and industry sector factors. SAR provides unique, verifiably independent, and factual data-driven insights on how equity investors react to company-specific information. Our semiannual publication of this data provides industry-leading practitioners with the securities litigation risk of U.S.-listed companies based on the frequency and severity of the observed Adverse Corporate Events to enhance the profitability of their mission.
Adverse Corporate Events (“ACEs”). SAR categorizes ACEs that have materialized during a standard two-year period prior to the evaluation date into three mutually exclusive categories based on the application of single firm event study analysis to test stock price performance of all corporate disclosures for any single issuer. All ACEs identified by SAR exhibit a close-to-close stock price decline that is statistically significant at the 95% confidence standard after accounting for the economic impact of the S&P 500 Total Return Index and an appropriate industry sector index based on the target company’s Global Industry Classification Standard (“GICS”).
TYPE I ACE:
• Stock price fell by a statistically significant amount at the 95% confidence standard over the close-to-close event window impacted by company-specific news.
• Company issues a public statement via a press release, or a representative discloses information at a press event or earnings call.
TYPE II ACE:
• Stock price fell by a statistically significant amount at the 95% confidence standard over the close-to-close event window impacted by company-specific news.
• Company made filings with the Securities and Exchange Commission (“SEC”), and no other relevant company news was identified.
HIGH-RISK ACE:
• Stock price fell by a statistically significant amount at the 95% confidence standard over the close-to-close event window impacted by company-specific news.
• Company issues a public statement via a press release, or a representative discloses information at a press event or earnings call.
• Company made filings with the SEC.
U.S. Securities Litigation Risk Quantification. SAR quantifies the potential securities litigation risk of an issuer according to the frequency and severity of High-Risk ACEs. The estimate is equal to an issuer’s cumulative market capitalization losses on all High-Risk ACEs identified during the corresponding two-year evaluation period.
The quantification of securities litigation risk presented herein is based on the economic impact of a public company’s corporate disclosures on the price of common stock traded in the NYSE or NASDAQ and does not constitute potential litigation exposure, aggregate damages, or liability that may be claimed by private investor plaintiffs or regulatory agencies that may file securities claims or actions against the issuer or individual defendants.
SAR Risk Score℠. The SAR Risk Score℠ is a proprietary score assigned to every public company listed on the NYSE or NASDAQ according to the frequency and severity of High-Risk ACEs during a two-year period from the designated evaluation date. The SAR Risk Score℠ is equal to the market capitalization losses observed on High-Risk ACEs divided by the issuer’s market capitalization as of the preceding trading day. For example, company ABC, Inc.’s market capitalization is $500 million. SAR identified three High-Risk ACEs during the preceding two years that amounted to $100 million in market capitalization losses. The SAR Risk Score℠ for ABC, Inc. is 20%. SAR caps risk scores at 100% for issuers whose market capitalization losses on High-Risk ACEs exceed the company’s current market capitalization.
Analytical Tabulation. This report presents tabulated summary analytics on the three categories of ACEs for eleven (11) industry sectors based on the GICS classification for Large Cap, Mid Cap, and Small Cap companies according to the historical comporting market capitalization range of the S&P 500 Index for Large Caps, the S&P MidCap 400 Index for Mid Caps, and the S&P Small Cap 600 Index for Small Caps.
All new data and analysis presented herein is based on corporate disclosures disseminated to investors between the close of trading on January 3, 2023 to the close of trading on December 31, 2024.
Securities Litigation Risk of U.S. Public Companies
The securities litigation risk of U.S. public companies is driven by the frequency and severity of ACEs from corporate disclosures disseminated over the preceding two years and each had a material impact on stock price performance during the corresponding trading day.
Frequency: Number of High-Risk ACEs
Independent, single-firm event study results on 4,605 U.S. public companies indicate remarkable consistencies on the overall and average frequency of material corporate disclosures that exhibited a negative statistically significant impact on stock price at the 95% confidence standard. The sample of companies analyzed exhibited on average 4.23 ACEs per company, nearly the same as observed during the two-year evaluation period ending Sept. 2024.
The three sectors with the highest average number of High-Risk ACEs are Industrials, Information Technology and Consumer Discretionary. The maximum number of High-Risk ACEs per issuer ranges between 7 and 19 across all sectors. Eight of the 11 sectors averaged at least two High-Risk ACEs per issuer. None of the sectors averaged fewer than 1.5 High-Risk ACEs during the two-year period.
As presented in the subsequent Tables 2-12, Large Caps exhibited the highest frequency of High-Risk ACEs in six out of the 11 sectors. Small Caps had the lowest frequency of High-Risk ACEs in six out of 11 sectors.
Figure 1a: Market Capitalization Losses on High-Risk ACEs
$10.0 Trillion
Figure 1b: Market Capitalization Losses per High-Risk ACE
Severity: Market Capitalization Losses on High-Risk ACEs
The magnitude of severity amounts to the cumulative market capitalization declines observed during the close-to-close event windows on High-Risk ACEs during the preceding two years. Figure 1a ranks the 11 sectors according to the magnitude of market cap. losses on trading days impacted by observed High-Risk ACEs. At approximately $2.8 trillion in market cap. losses, issuers in Information Technology exhibit the highest level of sector-specific market cap. losses, comprising 27.8% of the global quantum. Consumer Discretionary and Health Care exhibited the second and third greatest amount of market cap. losses, respectively.
Figure 1b presents market cap. losses per High-Risk ACE for each industry sector Real Estate exhibited the lowest market cap. losses per High-Risk ACE at $0.19 billion. Information Technology exhibited the greatest amount of market cap. losses per High-Risk ACE at $1.7 billion. Consumer Discretionary and Information Technology are in the Top 3 in both Figures 1a and 1b. Health Care, on the other hand, had a greater magnitude of sector-wide securities litigation risk, but is the second-to-least riskiest according to market cap. losses per High-Risk ACE. This dynamic is due in part to the high frequency of High-Risk ACEs that Small Caps exhibit in the Health Care sector and is another trend that has persisted since Sept. 2024.
All Industry Sectors
U.S. Securities Litigation Risk
Key Takeaways
• The aggregate securities litigation risk footprint of companies that trade on the NYSE and NASDAQ exhibit approximately $10.0 trillion in market cap. losses as of Dec. 31, 2024. This quantum is derived from the cumulative, statistically significant stock price declines on High-Risk Adverse Corporate Events (“ACEs”) exhibited over the preceding two years.
• The median SAR Risk Score℠ for U.S.-listed companies, as of Dec. 31, 2024, amounts to 17.93%. Health Care exhibits the highest median SAR Risk Score℠ at 29.11%. This is 24.14 percentage points greater than Utilities, which has the lowest median score, at 4.97%.
• Single firm event study analyses on 10,536 ACEs of 4,605 U.S. public companies indicate that High-Risk ACEs continue to exhibit the highest frequency among SAR’s three categories. Frequency and severity of High-Risk ACEs increased by 6.0% and 7.0%, respectively, relative to the two-year period ending Sept. 2024.
[2] SAR analyzes the actively trading common stock and ADR issuances of every public company on the NYSE or NASDAQ with sufficient data to perform a robust event study analysis that applies court-accepted statistical standards using a uniform two-year evaluation period and assigns a SAR Risk Score℠. This column displays the number of analyzed issuers in each industry sector.
[3] Adverse Corporate Events (“ACEs”) are statistically significant negative single-trading day stock price movements corresponding to company-specific news identified by SAR. There are three types of ACEs. Type I are company-originating news that do not include regulatory filings (i.e., press releases, earnings calls, corporate statements). Type II relate to corporate disclosures made via filings with the SEC. High-Risk are both company-originating news and regulatory filings made with the SEC.
[4] The average number of Type I ACEs identified among the sector.
[5] The average number of Type II ACEs identified among the sector.
[6] The average number of High-Risk ACEs identified among the sector.
[7] The cumulative quantum of market capitalization losses on identified High-Risk ACEs for issuers during the preceding two years as of December 31, 2024.
Table 1: Frequency and Severity of Adverse Corporate Events by Industry Sector
U.S. Securities Litigation Risk
Key Takeaways
• The Energy sector’s securities litigation risk footprint decreased relative to Sept. 2024, as evidenced by a reduction in market cap. losses of 23.8%, or approx. $79.6 billion.
• Market cap. losses per High-Risk ACE decreased relative to Sept. 2024 across all three market cap. categories.
• Average market capitalizations in the sector decreased by $350 million.
• The median SAR Risk Score℠ of the 210 constituent companies in the Energy sector is 8.95%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 6.46%, 9.53%, and 15.53%, respectively.
Table 2: Energy — Frequency and Severity of Adverse Corporate Events
Figure 2a: Frequency of ACEs
Figure 2b: Total ACEs by Market Cap
U.S. Securities Litigation Risk
Key Takeaways
• The Material sector’s securities litigation risk footprint exhibited a modest increase relative to Sept. 2024. Market cap. losses increased by 8.9%, or $21.01 billion.
• Observed maximum count of each category of ACE for constituent companies of the materials sector is greater than or equal to those observed in Sept. 2024.
• The median SAR Risk Score℠ of 222 constituent companies in Materials is 13.08%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 8.12%, 16.88%, and 22.48%, respectively.
• The median SAR Risk Score℠ for Materials increased by a modest 0.2 percentage points.
Table 3: Materials — Frequency and Severity of Adverse Corporate Events
Figure
Figure 3b:
U.S. Securities Litigation Risk
Key Takeaways
• The Industrial sector’s securities litigation risk footprint increased relative to Sept. 2024 driven by a 18%, or $163.05 billion, uptick in market cap. losses.
• Market cap. losses per company in the Industry Sector increased from $1.41 billion to $1.68 billion, or 19.2%.
• The median SAR Risk Score℠ of 638 constituent companies in Industrials is 18.92%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 15.42%, 26.00%, and 29.00%, respectively.
• The median SAR Risk Score℠ of constituent companies in the industrials sector increased by 2.1 percentage points since Sept. 2024.
Table 4: Industrials — Frequency and Severity of Adverse Corporate Events
Figure 4a: Frequency of ACEs
Figure 4b: Total ACEs by Market Cap
U.S. Securities Litigation Risk
Sector Market Capitalization Losses Amount to $1.6 Trillion
Key Takeaways
• The securities litigation risk footprint has remained stable relative to Sept. 2024. Market cap. losses increased by $117.97 billion to $1.6 trillion, or 7.8%.
• The frequency of High-Risk ACEs increased from 2.23 to 2.48. This represents an increase of 11.03% relative to Sept. 2024 and accounts for the highest percentage increase across all 11 sectors.
• The median SAR Risk Score℠ of 548 constituent companies in Consumer Discretionary is 24.21%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 17.26%, 23.40%, and 34.29%, respectively.
• Market capitalizations per company in the Consumer Discretionary sector exhibited the highest relative increase across all sectors; from $13.3 to $15.7 billion, or 15.8%. The median SAR Risk Score℠ increased by 1.03 percentage points.
Figure 5a: Frequency of ACEs
Figure 5b: Total ACEs by Market Cap
U.S. Securities Litigation Risk
Key Takeaways
• Consumer Staples exhibits a stable securities litigation risk footprint with lower market capitalizations and lower market cap. losses relative to Sept. 2024. Market cap. losses decreased by $13.1 billion, or -3.1%.
• Both frequency and the total number of High-Risk ACEs in the sector decreased by 1.7% and 6.6%, respectively.
• The median SAR Risk Score℠ of 189 constituent companies in Consumer Staples is 16.89%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 11.20%, 14.32%, and 25.28%, respectively.
• Market capitalizations per company in the Consumer Staples sector decreased, on average, by $600 million, or -2.84% relative to Sept. 2024.
Figure 6a: Frequency of ACEs
Figure 6b: Total ACEs by Market Cap
U.S. Securities Litigation Risk
Sector Market Capitalization Losses Amount to $1.4 Trillion
Key Takeaways
• The securities litigation risk footprint in the Health Care sector exhibited a notable increase driven by an increase in market cap. losses of 18.41%, or $210.5 billion, relative to Sept. 2024.
• The sector’s aggregate market capitalizations exhibited a marked decline of 16.6% relative to Sept. 2024 amounting to $7.1 trillion.
• The median SAR Risk Score℠ of 1,060 constituent companies in Health Care is 29.11%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 17.64%, 18.64%, and 40.08%, respectively.
• Market capitalizations per company in the Health Care sector exhibited a substantial decrease of 14.2%, or $1.1 billion. The median SAR Risk Score℠ increased by 4.11 percentage points, which equates to the single largest increase in median score across all sectors.
Table 7: Health Care — Frequency and Severity of Adverse Corporate Events
U.S. Securities Litigation Risk
Sector Market Capitalization Losses Amount to $1.3 Trillion
Key Takeaways
• Financials exhibited an increase in its securities litigation risk footprint relative to Sept. 2024. Market cap. losses increased by $99.97 billion, or 8.61%.
• The increase in market cap. losses on High-Risk ACEs was driven by greater severity, or magnitude of stock price declines, relative to frequency. The frequency of High-Risk ACEs increased by 1.43% relative to Sept. 2024.
• The median SAR Risk Score℠ of 737 constituent companies in Financials is 8.98%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 10.58%, 11.90%, and 7.00%, respectively.
• Market capitalizations per company increased, on average, by $516 million, or 3.93% relative to Sept. 2024.
Table 8: Financials — Frequency and Severity of Adverse Corporate Events
Figure
U.S. Securities Litigation Risk
Sector Market Capitalization Losses Amount to $2.8 Trillion
Key Takeaways
• The Information Technology sector continues to be the greatest contributor of market cap. losses on High-Risk ACEs at $2.8 trillion, an increase of approx. $0.8 trillion relative to Sept. 2024. IT leads across all 11 sectors with a greater share of aggregate market cap. losses, from 22.5% in Sept. 2024 to 27.8% as of Dec. 31, 2024.
• The sector has the highest market cap. losses per High-Risk ACE at $1.73 billion. Losses per High-Risk ACE increased by $0.36 billion, or 26.7%, relative to Sept. 2024.
• The median SAR Risk Score℠ of 620 constituent companies is 25.44%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 20.47%, 27.61%, and 32.84%, respectively.
• Market capitalizations in the sector increased, on average, by $2.64 billion, or 9.3% per company. The median SAR Risk Score℠ decreased slightly by 0.9 percentage points compared to Sept. 2024.
Table 9: Information Technology — Frequency and Severity of Adverse Corporate Events
U.S. Securities Litigation Risk
Sector Market Capitalization Losses Amount to $807.1 Billion
Key Takeaways
• The Communication Services securities litigation risk footprint had a substantial reduction relative to Sept. 2024. Market cap. losses decreased by 23.1%, from $1.0 trillion to $807.1 billion as of Dec. 31, 2024.
• Market cap. losses per High-Risk ACEs decreased by 25.4%, or $.54 billion relative to Sept. 2024. Notwithstanding, Communication Services remains the sector with the second greatest market cap. losses per High-Risk ACE
• The median SAR Risk Score℠ of 248 constituent companies in Communication Services is 19.06%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 15.03%, 23.67%, and 20.24%, respectively.
• Average market capitalizations in the Communication Services sector increased by 11.06%, or $2.31 billion.
Table 10: Communication Services — Frequency and Severity of Adverse Corporate Events
Figure 10a: Frequency of ACEs
Figure 10b: Total ACEs by Market Cap
U.S. Securities Litigation Risk
Market Capitalization Losses Amount to $124.4 Billion
Key Takeaways
• The securities litigation risk footprint in the Utilities sector increased relative to Sept. 2024, driven by a 13.9% increase in market cap. losses, or $15.1 billion.
• The increase in securities litigation risk for Utilities companies was driven by an increase of 20.7% in severity, or magnitude of market cap. losses per High-Risk ACE, and not by the modest decline in the total number of High-Risk ACE relative to Sept. 2024.
• The median SAR Risk Score℠ of 83 constituent companies in Utilities is 4.97%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 4.70%, 2.83%, and 9.44%, respectively.
• Market capitalizations in the sector increased, on average, by 2.2% per company, or $366 million. The sector’s median SAR Risk Score℠ increased by 0.15 percentage points since Sept. 2024.
Table 11: Utilities — Frequency and Severity of Adverse Corporate Events
Figure 11a: Frequency of ACEs
Figure 11b: Total ACEs by Market Cap
U.S. Securities Litigation Risk
Sector Market Capitalization Losses Amount to $15.1 Billion
Key Takeaways
• The securities litigation risk footprint in the Real Estate sector remains stable relative to Sept. 2024. The sector continues to be the lowest contributor of market cap. losses on High-Risk ACEs, amounting to a mere 0.2% of the global quantum.
• The sector had the lowest market cap. losses per High-Risk ACE for Large Caps across all sectors at $0.91 billion, 24.9% less than Utilities, the second lowest sector.
• The median SAR Risk Score℠ of 50 constituent companies in Real Estate is 8.98%. The Large, Mid, and Small Cap Median SAR Risk Score℠ are 4.14%, 15.35%, and 9.26%, respectively.
• Market capitalizations per company increased by $126 million.
Table 12: Real Estate— Frequency and Severity of Adverse Corporate Events
The securities litigation risk footprint of each industry sector is driven by the relative proportion of the frequency and severity of ACEs, aggregate Sector Market Capitalization, and the aggregate Market Cap. Losses stemming from High-Risk ACEs. The securities litigation risk footprint at the industry sector level is well demonstrated by the ratio of a sector’s market cap. losses on High-Risk ACEs to its current aggregate market capitalization.
Figure 13a displays the change in the ratio of market cap. losses to each sector’s current aggregate market capitalization. Between the two-year period ending in Sept. and Dec. 2024, this ratio decreased across four sectors: Energy, Consumer Discretionary, Communication Services and Real Estate. On average, the sectors that experienced a reduction in their ratio decreased by 2.58 percentage points. Communication Services had the most notable decrease. The ratio of market cap. losses to aggregate market capitalization decreased from 20.28% to 14.05% (-6.24 percentage points), driven primarily by a substantial reduction in market cap. losses. Conversely, Health Care suffered the highest percentage point increase relative to all sectors. The ratio increased from 13.48% to 19.15%, an uptick of 5.67 percentage points. The increase is attributed to both a decrease in market capitalizations and an increase in market cap. losses.
Figure 13b ranks each sector by the ratio of market cap. losses to each sector’s aggregate market capitalization as of Dec. 2024. The range spans from 8.68% (Utilities) to 19.18% (Consumer Discretionary). This ratio highlights the potential magnitude of securities litigation risk for each sector by accounting for the cumulative material impact on stock price performance when constituent companies issued corporate statements and filed documents with the SEC.
The ratio of market cap. losses to aggregate market capitalizations may or may not differ from a sector’s median SAR Risk Score℠ While the average difference between both measures across all eleven sectors is only about -2.89 percentage points, some sectors have considerable variations in both measures according to the number of companies in the sector and fluctuations in market capitalizations relative to market cap. losses. The sector-specific median SAR Risk Score℠ is most appropriately applied to assess company-specific risk in a near-real time basis. Its value empowers the risk manager and investment professional to understand the relative risk of a particular constituent company with respect to the median constituent. On the other hand, a sector’s ratio of market cap. losses to each sector’s aggregate market capitalization is most fittingly understood as a measurement of absolute risk. It provides a metric that quantifies a sector’s overall securities litigation risk based on the magnitude of market cap. losses triggered by material corporate disclosures issued via press releases and filings made with the SEC.
SAR quantifies the SAR Risk Score℠ at the sector, group, industry and sub industry level. See Appendix 1 for a breakdown across all sectors.
Figure 13a: Change in Ratio of Market Cap. Losses to Sector Market Cap.
Figure 13b: U.S. Securities Litigation Risk by Industry Sector
SAR employs a two-step process to evaluate trends in the securities litigation risk footprint of each industry sector. First, we graph the relative proportion of Type I, Type II, and High-Risk ACEs, together with Sector Market Capitalization and Market Cap. Losses, where each variable represents a single point in a polar coordinate system. Second, we calculate the geometrical area formed by the five points. Internally, SAR iterates this process on a near-real time basis and for purposes of this report, we evaluate the change between Sept. and Dec. 2024. The change in a sector’s footprint is based on the absolute difference between these two areas.
Based on this methodology, the industry sectors whose footprints exhibited the greatest change along the aforementioned 5-factors were Information Technology, Communication Services and Financials. These metrics at the time of the Inaugural Report (Sept. 2024) and as of the two-year period ending Dec. 31, 2024, are depicted in the figures below.
Information Technology. The sector with the greatest change in the securities litigation risk footprint was Information Technology. Market cap. losses associated with High-Risk ACEs constituted approx. 22.5% as of the two-year period ending Sept. 2024 and increased to 27.8% by Dec. 2024. Figure 13c shows that each of the 5-factors increased in the Information Technology sector. Market capitalization losses increased the most with 5.4 percentage points. The sector’s market capitalization relative to the overall U.S. equity markets increased by 1.8 percentage points. Type I, Type II and High-Risk ACEs increased by 1.4, 0.3 and 0.7 percentage points, respectively.
13c: Information Technology
Financials. Figure 13e shows the variation in the securities litigation risk footprint for Financials across the 5-factors. It shows that Financials’ market capitalization constitutes approx. 15% of the U.S. equities’ aggregate market cap. in both two-year periods ending in Sept. and Dec. 2024. The relative proportion of all three types of ACEs and market cap. losses triggered by High-Risk ACEs decreased by a small margin as of Dec. 2024. Nevertheless, the absolute change in the area of the Financials sector securities litigation risk footprint ranks as the third highest across all sectors.
Communication Services. Figure 13d displays the changes in Communication Services, which exhibited the second greatest change in securities litigation risk footprint. The deltas across the 5-factors are less pronounced compared to Information Technology. Market cap. losses associated with High-Risk ACEs in Communication Services constituted about 12% of the aggregate market cap. losses as of the two-year period ending Sept. 2024. It decreased to about 8% as of Dec. 2024. The sector’s proportion of the aggregate U.S. equities market capitalization grew by 0.6 percentage points to approx. 9%. In total, all but one factor in the sector decreased between the two-year period ending in Sept. and Dec. 2024.
Figure 13d: Communication
Figure
Figure 13e: Financials
Securities Analytics Research
SAR is the leading data analytics company specialized in the securities litigation risk of public companies that trade on the NYSE or NASDAQ.
Our goal is to harmonize the application of event study analysis across the risk management industry by following the standards adopted by the Federal Judiciary and developed in academia to optimize executive and financial risk-transfer solutions through responsible innovation in technology and data science.
Our organization is focused on the proactive and uniform application of the court-accepted event study methodology to identify securities litigation risks more accurately and quantify the corresponding economic impact on the market capitalization of U.S.-listed companies. SAR delivers value through transparency by proactively monitoring corporate disclosures of U.S. and non-U.S. issuers to detect Adverse Corporate Events that have a material impact on stock price performance.
Our company empowers leading multinational insurance carriers, re-insurers, risk management executives, legal counsel and investment professionals with proven securities litigation risk analytics and high-quality data licensing solutions. We have high standards of raw data requirements and quality control to ensure the tried-and-true technologies of the SAR Platform℠ deliver superior data-driven advantages to better protect corporate directors and officers of companies that choose to trade in American stock exchanges — the gold standard.
Our analytics solutions apply highly specialized data science to identify and quantify the securities litigation risks that corporate directors and officers of public companies may face from company-specific disclosures that materially impact an issuer’s stock price performance. SAR maintains two comprehensive industry-leading databases that comprise the knowledge bank of SAR Platform℠ The ACE Database catalogues stock price performance data on all corporate disclosures that are disseminated via corporate press releases or announcements and filings made with the Securities and Exchange Commission. The SCA Database catalogues stock price performance data on all corporate disclosures that are claimed to be fraud-related by investor plaintiffs in private securitiesfraud litigation. Documented standard operating procedures and assigned process owners in both data science and software engineering ensure that SAR remains at the forefront of responsible technological innovation backed by human accountability to deliver unmatched insights on the securities litigation risks facing directors and officers of public companies
We invite you to learn more about SAR by taking the time to read our industry-leading thought leadership at sarlit.com/thought-leadership.
U.S. Securities Litigation Report Disclaimer
This independent research report presents SAR’s quantification of the securities litigation risks of U.S. and non-U.S. issuers that trade on the NYSE or NASDAQ based on the proactive and uniform application of the court-accepted event study methodology. SAR continuously tests stock price performance over the corresponding close-to-close event window in response to corporate disclosures disseminated by issuers to more accurately identify Adverse Corporate Events categorized according to the issuers’ applied corporate disclosure mechanism. All content published by SAR and presented in this report is based on securities analytics and research performed by professionals employed by the organization. SAR does not rely on any machine learning (ML) or artificial intelligence (AI) to produce the quantitative and statistical analyses presented herein or via the SAR PlatformSM and ACE Alert subscription service. SAR actively maintains two highly comprehensive databases that archive and categorize all ACEs of U.S. and non-U.S. issuers in addition to all alleged corporate disclosures that are claimed to be fraud-related by investor plaintiffs in private securities-fraud class action litigation. SAR ranks all public companies that trade on the NYSE or NASDAQ according to the SAR Risk ScoreSM on a near-real time basis and publishes summarized analytical tabulations and trends on a semi-annual basis.
Securities litigation risks for observed Adverse Corporate Events identified by SAR may or may not materialize into actual securities claims brought by allegedly harmed shareholders in common stock of the defendant issuers against the corporate directors and officers or the corresponding securities offering underwriters.
Securities claims may include, but are not limited to, securities class actions whereby investor plaintiffs allege violations of the federal securities laws under Section 11, Section 12(a)(2), and Section 15 of the Securities Act of 1933 (“Securities Act”), and under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder (“Exchange Act”). Securities litigation risks may also materialize from enforcement actions filed in federal court by the SEC for alleged violations of the antifraud provisions of the securities laws of the Exchange Act, Securities Act, or the Investment Advisors Act of 1940. The economic impact of securities litigation risks presented in this equity research report amounts to the cumulative market capitalization declines over close-to-close event windows on High-Risk ACEs identified by SAR’s application of the court-accepted event study methodology.
SAR Risk Report Event Study Application Disclosure
The results of the analyses presented in this report apply the use of a court-accepted event study methodology to identify ACEs ACEs are identified by estimating statistically significant, single-trading day negative stock price movements that coincide with companyspecific news. For each analyzed issuance, statistically significant price movements are detected by applying the results of a singlefirm control regression with a minimum of 100 trading day observations and controls for general market and industry-specific factors. The general market factor in all cases is represented by the S&P 500 Total Return index. The industry-specific factors are represented by indices that correspond to the analyzed company’s GICS classification. The applied event study methodology is performed post close of trading on the issues of public companies that trade on the NYSE or NASDAQ over a two-year retroactive evaluation period from the applied evaluation date and to test stock price performance in response to all company-specific corporate disclosures. Economic estimates by SAR are only estimates or projections, and actual results may vary, and may vary substantially, from those estimates or projections, which are based on many variables, assumptions, and forecasts, many of which are beyond the control of SAR and any of which may present differences with estimates that are quantified using different techniques that may or may not be submitted by officers of court for review by the Federal Judiciary. No fraud or wrongdoing of any kind is alleged or implied by any such results derived by SAR and presented herein in this equity research report.
Sources: SAR ACE Database as of December 31st, 2024, FINRA, Securities and Exchange Commission, S&P Global Market Intelligence, S&P Down Jones Indices
How to Reach Us.
For any technical inquiries contact Stephen Sigrist, Senior Vice President of Data Science.
To learn more about how SAR can help your organization deliver superior executive and financial risk transfer solutions please contact Anthony Kabanek.
202.436.9994 anthony@sarlit.com
Appendix 1: SAR Risk Score℠ (Median), by GICS Classification
The following tables provide the median SAR Risk ScoreSM by Group, Industry and Sub Industry, as defined by the Global Industry Classification Standard (“GICS”). The median scores are based on our sample of 4,605 companies. The last column provides the percentage points difference in median SAR Risk ScoreSM between September 2024 and December 2024. A +1.0 implies that a sub industry’s median SAR Risk ScoreSM in December 2024 increased by one percentage points relative to September 2024 while -1.0 implies a reduction.
