Developments in U.S. Securities Fraud Class Actions Against Non-U.S. Issuers

In 2024, plaintiffs filed 36 securities class action lawsuits against non-U.S. issuers, up by three from the 33 filings in 2023.

Although this number indicates an uptick in non-U.S. issuer filings, it remains significantly lower than the high of 88 filings in 2020¹.

• As was the case in 2023, 2022, and 2021, the Second Circuit unsurprisingly continues to be the jurisdiction of choice for plaintiffs bringing securities claims against non-U.S. issuers. In 2024, plaintiffs favored the Second Circuit by an even larger margin, filing 67% of non-U.S. issuer class actions in the Second Circuit (24 of 36), as compared with last year’s 45% (15 of 33). A majority of these lawsuits (18 of 24) were filed in the Southern District of New York (“S.D.N.Y.”), with the six remaining Second Circuit lawsuits filed in the Eastern District of New York (“E.D.N.Y.”). Roughly 17% of the 36 lawsuits were filed in the Ninth Circuit (6), followed by three in the Third Circuit. Only one case was filed in each of the First, Sixth and Eleventh Circuits.
• Unlike the past three years, most non-U.S. issuer lawsuits were no longer against companies with headquarters and/or principal places of business in China. Of the 36 non-U.S. issuer lawsuits filed in 2024, seven were against companies headquartered in the United Kingdom, followed by a tie for second between companies based in Canada (5) and Israel (5), and a tie for third between companies based in China (3) and Germany (3).
• Pomerantz LLP claimed the top spot with the most first-in-court filings against non-U.S. issuers in 2024 (10), followed by Bronstein, Gewirtz & Grossman, LLC (7), usurping the Rosen Law Firm, P.A. (6). The Rosen Law Firm made 11 first-in-court filings in 2023 and held the lead for most first-in-court filings from 2018 through 2021. The Rosen Law Firm was appointed lead counsel in the most cases in 2024 (4), followed by Robbins Geller Rudman & Dowd LLP (3).
• The fourth quarter of 2024 proved the most active for securities class action filings against non-U.S. issuers, with 13 cases filed. Combining Q4 filings with those in Q3, the second half of 2024 yielded most of the 2024 filings, totaling 23 out of 36.
• Although the 36 lawsuits spanned 16 different industries, the largest number of filings involved the automobile industry (6), followed by the biotechnology and drugs industry (5) and software and programming industry (5).. 

An examination of the types of cases filed in 2024 reveals the following substantive trends:

• Four of the 36 cases were filed against electric vehicle (“EV”) companies, with three of those companies specializing in designing and manufacturing EVs, and one in developing an electric takeoff and landing jet.
• Four cases were filed against biotechnology or pharmaceutical companies, concerning a COVID-19 vaccine, medical treatments made through the use of umbilical cords, and artificial-intelligence assisted drug recovery therapy.
• Two cases also involved companies that use artificial intelligence (“AI”).
• Eleven cases involved allegations of overstated growth and revenues. These cases spanned industries, including AI, advanced vehicle technology, automobiles, semiconductors, software and programming, banking, aerospace communication, oil and gas, and retail.

Although the overall number of securities class actions increased slightly in 2024, the proportion of cases against non-U.S. issuers remained relatively unchanged.

The filings make clear that a company does not need to be based in the U.S. to face potential securities class action liability in U.S. federal courts. Accordingly, it is imperative that non-U.S. issuers take steps to mitigate their risks not only in their home jurisdictions but also in the U.S.

Non-U.S. issuers should be particularly cognizant when making disclosures or statements to:

• Ensure accurate growth and financial projections;
• Speak truthfully and disclose both positive and negative results;
• Ensure that a disclosure regimen and processes are well-documented and consistently followed;
• Work with counsel to ensure that a disclosure plan is adopted that covers disclosures made in press releases, SEC filings and by executives; and
• Understand that companies are not immune to issues that may cut across all industries.

Non-U.S. issuers should work with the company’s insurers and hire experienced counsel who specialize in and defend securities class action litigation on a full-time basis.

Finally, to the extent that a non-U.S. issuer finds itself the subject of a securities class action lawsuit, the bases upon which courts have granted or denied motions to dismiss similar cases in the past can be instructive.