Securities Litigation Risk for Public Companies Rose by $1 Trillion in Fourth Quarter

Securities litigation risk for U.S. public companies rose by $1 trillion as of the fourth quarter of 2024, a new report shows.

SAR, a data analytics company specialized in the securities litigation risk, published its U.S. Securities Litigation Risk Report – January 2025.

The report shows that as of December 2024, corporate disclosures based on public statements and filings made with the Securities and Exchange Commission that had a material impact on stock price of companies listed in the NYSE or NASDAQ increased in both frequency and severity by 6% and 7% relative to the two-year period ending in September 2024.

SAR identified 10,536 high-risk adverse corporate events from a population of 4,605 U.S. public companies as of the two-year period ending December 31, 2024.

The market capitalization losses related to high-risk adverse corporate events amount to roughly $10 trillion, an increase of $1.1 trillion relative to the two-year period ending September 2024, according to the report.

The information technology sector carriers the most risk with $2.8 trillion, followed by consumer discretionary ($1.6 trillion) and health care ($1.4 trillion)

Other findings in the report include:

• As of December 2024, the sector with the highest market capitalization losses as percentage of the sector-specific market capitalization is consumer discretionary (19.18%), followed by health care (19.15%) and industrials (17.63%).
• Information technology companies faced the greatest market capitalization losses per high-risk adverse corporate event, amounting to $1.73 billion, followed by communication services ($1.59 billion) and consumer discretionary ($1.2 billion).
• The sector with the highest median SAR Risk Score is health care with a median score of 29.11%, followed by Information technology (25.44%) and consumer discretionary (24.21%).