Rising AI and Biotech Cases in 2024 Securities Class Actions, Key Ninth Circuit Ruling Ahead

An article by the Cooley firm examines Cornerstone Research’s 2024 Year in Review report and highlights significant trends in securities class actions. The report shows an uptick in cases for the second consecutive year.

The Ninth Circuit is expected to weigh in on the Supreme Court’s 2021 decision in Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System, adding further guidance on class certification in securities cases.

The report points to a rise in Section 10(b) claims under the Securities Exchange Act of 1934, particularly among biotechnology and AI-related companies, while filings involving SPACs, cybersecurity, and cryptocurrency continue to decline.

The report’s findings indicate a notable shift in securities class-action trends. In 2024, filings increased to 225 cases, compared to 215 in 2023, with a record high of 198 Section 10(b)-only claims.

In contrast, filings under the Securities Act of 1933, especially Section 11 claims, saw a sharp decline, likely reflecting a drop in IPOs. Biotech companies, in particular, have been targeted with an increasing number of securities lawsuits.

AI-related cases also rose sharply, with 15 filed in 2024, more than double that filed in 2023. On the other hand, filings related to SPACs, cybersecurity, and cryptocurrency decreased significantly.

In its ruling, the Ninth Circuit is set to provide crucial clarification on applying the Goldman Sachs decision. The case addresses the presumption of reliance in securities fraud cases. It will offer additional guidance on evaluating whether a corporation’s misstatements could have artificially inflated its stock price.

This decision is expected to be pivotal for securities class actions in the future, particularly regarding the standard for class certification.

Attorneys should note that the 2024 trends emphasize the importance of closely monitoring developments in biotech and AI-related securities cases and preparing for further guidance from the Ninth Circuit, which could impact class certification strategies.