Developments in securities litigation move fast, and not all of them matter equally. Each month, Alto Litigation curates and summarizes the cases, rulings, and regulatory actions most likely to shape risk and strategy in the months ahead.
Securities Class Action Filings Hit Record Size in 2025
A new year-end report from Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse shows that while the number of securities class actions declined in 2025, the size of those cases reached historic levels.
According to the report, plaintiffs filed 207 securities class actions in federal and state courts in 2025, down from 226 in 2024 and marking the first year-over-year decline in filings in two years. That drop in volume, however, masks a sharp escalation in potential exposure.
Both Disclosure Dollar Loss (DDL) and Maximum Dollar Loss (MDL) increased dramatically. Total DDL rose from $429 billion in 2024 to $694 billion in 2025, setting an all-time record. MDL climbed to $2.86 trillion, a 75 percent increase year over year and the third-highest level on record.
So-called “mega filings” continued to dominate the landscape. Although only 36 mega cases were filed in 2025, they accounted for 89 percent of total MDL and 81 percent of total DDL, well above long-term historical averages. In other words, a relatively small number of cases drove the overwhelming majority of market risk.
The report also noted modest growth in AI-related filings, with 16 cases filed in 2025, though activity slowed significantly in the second half of the year. Former SEC Commissioner Joseph Grundfest highlighted that larger dollar losses tend to correlate with larger settlements, regardless of whether overall filing volume softens, and noted that private litigation often follows SEC enforcement activity.
What this means: Even with fewer filings overall, exposure risk remains elevated. Companies may face fewer suits, but those suits are increasingly high-dollar and high-impact, particularly where “mega” cases are involved. Settlement exposure tends to track the dollar amounts at issue more closely than filing volume.
Supreme Court to Clarify the SEC’s Disgorgement Powers
On January 9, 2026, the Supreme Court granted certiorari in Sripetch v. Securities & Exchange Commission, a case that will resolve a circuit split over whether the SEC may obtain disgorgement without showing that investors suffered pecuniary harm.
The case arises from allegations that Ongkaruck Sripetch used pump-and-dump schemes involving at least 20 public companies. After consenting to judgment, the district court ordered Sripetch to disgorge approximately $3.3 million in profits and prejudgment interest. On appeal, the Ninth Circuit held that disgorgement does not require proof of investor losses because its purpose is to deprive wrongdoers of ill-gotten gains, not to compensate victims.
That holding aligned the Ninth Circuit with the First Circuit, but conflicted with the Second Circuit’s 2023 decision in SEC v. Govil, which concluded that disgorgement is unavailable absent proof of investor pecuniary harm, relying on the Supreme Court’s decision in Liu v. SEC.
Why it matters: The Court’s decision will determine whether disgorgement remains available in enforcement matters where investor losses are difficult to trace to identifiable victims, a question that bears directly on the scope of the SEC’s remedial authority.
Supreme Court to Test the Boundaries of Jarkesy
The Court also agreed to hear FCC v. AT&T and Verizon Communications Inc. v. FCC, consolidated cases that ask whether the Seventh Amendment permits the FCC to impose monetary penalties through administrative proceedings without a jury trial.
The cases squarely present the question left open after SEC v. Jarkesy: whether a statutory scheme satisfies the jury-trial right when a regulated entity may obtain a jury trial only by refusing to comply with an agency penalty and forcing the government to bring a collection action in federal court.
The government contends that the system is constitutional because a jury trial is technically available. The carriers respond that this “choice” is a fallacy: to reach a jury, they would have to defy a final FCC order and absorb the reputational and business fallout of noncompliance, a burden they argue the Seventh Amendment does not permit.
Why it matters: A ruling for the carriers could significantly extend Jarkesy beyond the SEC, narrowing Congress’s ability to authorize agencies to impose civil penalties through in-house proceedings.
Ninth Circuit Affirms Dismissal of XRP Securities Class Action
The Ninth Circuit this month affirmed the dismissal of a long-running putative class action alleging that Ripple Labs unlawfully sold XRP tokens as unregistered securities.
The district court had dismissed the case in June 2024, holding that the claims were time-barred under the Securities Act’s three-year statute of repose. On appeal, the Ninth Circuit agreed, rejecting arguments that Ripple’s 2017 distribution of XRP constituted a new offering that would reset the limitations period.
The decision leaves intact an early defense win and reinforces the importance of statute-of-repose defenses in digital asset litigation, particularly where token distributions occurred years before suit was filed.
What to watch: As digital asset litigation matures, courts continue to scrutinize timing defenses closely. Statute-of-repose arguments remain a potent tool, especially where plaintiffs attempt to recharacterize later distributions as new offerings.
D.C. District Court Upholds SEC’s Use of Administrative Proceedings for Industry Bars
In Sztrom v. SEC, the U.S. District Court for the District of Columbia held that Jarkesy does not prevent the SEC from seeking industry bars through administrative “follow-on” proceedings.
Distinguishing civil monetary penalties from equitable and remedial sanctions, the court concluded that longstanding precedent permits the SEC to pursue industry bars administratively following a federal-court injunction. The plaintiffs have appealed.
What this means: While Jarkesy reshaped how the SEC pursues penalties, it did not dismantle the agency’s administrative enforcement regime. The decision reflects courts’ continued distinction between punitive monetary remedies and remedial or equitable sanctions.
Northern District of California Dismisses DocuSign Securities Action With Prejudice
In Weston v. DocuSign, Inc., Judge Vince Chhabria dismissed a securities class action with prejudice, finding that the complaint’s characterization of internal company documents was “misleading and confusing” and incapable of cure.
The court emphasized that plaintiffs’ descriptions of internal materials were materially distorted, noting that the misrepresentations alone could justify dismissal without further analysis.
What this means: Courts remain willing to dismiss securities complaints with prejudice where plaintiffs mischaracterize internal documents or rely on selective, misleading narratives — reinforcing the importance of early, document-driven defense strategies.
Delaware Supreme Court Reverses Chancery Decision in Moelis & Co.
On January 20, 2026, the Delaware Supreme Court reversed the Court of Chancery’s decision in West Palm Beach Firefighters’ Pension Fund v. Moelis & Co., holding that a challenge to provisions of a stockholder agreement granting CEO Ken Moelis extensive approval rights was time-barred.
The Court held that the challenged provisions were at most voidable – not void – because the company could have lawfully implemented similar governance arrangements through its certificate of incorporation. As a result, the claims were subject to equitable defenses, including laches. Because the stockholder agreement was executed in 2014 and the plaintiff waited nearly nine years to sue, the Court concluded that the challenge exceeded the analogous three-year statute of limitations and was barred.
The decision comes against the backdrop of recent amendments to the Delaware General Corporation Law that expressly authorize certain stockholder governance agreements by contract. Although those amendments did not apply retroactively to the Moelis dispute, the Supreme Court’s ruling underscores the importance of timeliness in challenges to long-standing corporate governance arrangements and confirms that not every statutory defect renders an agreement void from inception.
What this means: The decision underscores the importance of statute-of-limitations and laches defenses in stockholder litigation, particularly where plaintiffs seek to invalidate long-standing contractual arrangements.
SEC Charges ADM and Former Executives Over Accounting Adjustments
Cooperation credited in $40 million settlement
The U.S. Securities and Exchange Commission announced settled charges against Archer-Daniels-Midland Company and two former executives, along with a litigated action against a third former executive, arising from alleged accounting and disclosure misconduct.
According to the SEC, the company’s Nutrition segment used targeted intersegment adjustments, including retroactive rebates and price changes, to meet publicly disclosed profit targets. The SEC alleged that these practices rendered certain public filings materially misleading.
ADM agreed to pay a $40 million civil penalty, while two former executives paid disgorgement and penalties and consented to cease-and-desist orders. One executive also agreed to a three-year officer-and-director bar. The SEC credited ADM’s cooperation and remediation efforts, including an internal investigation and enhanced accounting controls.
What this means: The resolution underscores the SEC’s focus on accounting practices and disclosures around intersegment transactions and segment performance reporting. It also reinforces the tangible benefits the Commission may credit for early cooperation, remediation, and efforts to boost internal controls.
Looking Ahead: Themes for 2026
A year-end analysis by Alyssa Aquino of the New York Law Journal highlighted several issues likely to shape securities litigation in 2026, including:
● Increased attention to mandatory arbitration provisions following the SEC’s September policy shift
● The potential for private actions to fill perceived gaps amid reduced SEC enforcement
● Continued scrutiny of AI-related disclosures
● Ongoing development of scheme liability theories under Rule 10b-5(a) and (c)
● Expanded use of price-impact defenses at the class certification stage
What’s next:
Early rulings on arbitration provisions, AI disclosures, and class certification defenses may set the tone for securities litigation strategy in 2026 and beyond, particularly in cases involving emerging technologies or novel pleading theories.
For more information regarding Alto Litigation’s litigation practice, please contact one of Alto Litigation’s partners: Bahram Seyedin-Noor, Bryan Ketroser, Joshua Korr, or Kevin O’Brien.
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