Photo of Sarah Abrams

Sarah Abrams

Subscribe to Sarah Abrams's Posts

Artificial intelligence-related securities litigation continues to accelerate, with plaintiffs increasingly targeting not only alleged misstatements about AI products and capabilities, but also companies’ disclosures regarding their investments in AI and the impact of those investments on business operations.  A couple of recently filed lawsuits challenge AI-related spending and capital allocation decisions, which may underscore whether growing investor scrutiny of whether management adequately disclosed the financial risks, costs, and tradeoffs associated with aggressive AI initiatives.

Continue Reading Another AI Spending-Related Securities Class Action

In recent years, the D&O Diary has followed the growing debate over whether companies should reincorporate outside Delaware, particularly in states such as Nevada and Texas.  We have also followed Delaware’s efforts to address the trend through measures including the enactment of SB 21 and the Delaware Supreme Court’s decision upholding the statute.

And we queried whether DExit could prove to be a new source of D&O exposure. A newly amended class action complaint against Dropbox may provide yet another example of that risk, as shareholders are challenging Dropbox’s reincorporation to Nevada, alleging that the move was undertaken to protect management and the controlling stockholder from accountability for underlying business and governance decisions.

Continue Reading Dropbox Derivative Suit Over a DExit

The wave of litigation involving private credit continues to expand. FS KKR Capital Corp. (“FSK”), one of the largest publicly traded business development companies (“BDCs”), is already defending a securities class action lawsuit (KKR SCA) alleging that it overstated asset valuations and misrepresented the effectiveness of its efforts to address troubled portfolio companies. On July 15, 2026, a shareholder of FSK filed a separate derivative lawsuit against the company’s external investment adviser, FS/KKR Advisor, LLC (FS/KKR), alleging that the adviser extracted grossly excessive advisory fees in violation of its fiduciary duties under Section 36(b) of the Investment Company Act of 1940.

Continue Reading Another Private Credit Excessive Fee Lawsuit

D&O Diary readers are aware of a growing trend over the past year: an increasing number of securities class actions arising from alleged market manipulation involving low-float public companies. These cases, ranging from pump-and-dump and spoofing schemes to stock promotion claims, now also include a lawsuit filed this week against Megan Holdings Limited (Megan), whose share price allegedly surged more than 400% in one month before plunging over 93% in a single trading day. The company, headquartered in Malaysia, develops, constructs, and maintains aquaculture farms and related infrastructure. 

Continue Reading Pump-and-Dump Securities Suit Adds to Growing Market Manipulation Litigation Trend

Over the past couple of years, the D&O Diary has followed how geopolitical developments, including wars, sanctions, tariffs, export controls, and trade disputes, can create public company D&O exposure. These developments can present disclosure challenges and have led to securities suits arising from export controls, tariffs, and related business impacts.

A recently filed securities class action against Photronics, Inc. (Photronics) highlights how later statements about geopolitical tensions and supply chain challenges can be woven into broader claims that a company’s earlier disclosures were misleadingly incomplete. Photronics manufactures photomasks, the highly precise templates used in the process to produce semiconductors. While the complaint primarily alleges misstatements about product demand and financial performance, it also cites disclosure failures related to the U.S.-Iran conflict and supply chain disruptions.

Continue Reading What Constitutes Geopolitical Disclosure Risk?

One of the questions that has accompanied the Securities and Exchange Commission’s changing approach to digital asset regulation is whether a decline in enforcement activity would lead to an increase private plaintiff litigation against cryptocurrency and crypto-adjacent companies.  A July 7, 2026, report by NERA Economic Consulting (NERA) suggests the answer may be more nuanced. While, according to NERA’s analysis, private securities litigation has become a larger share of crypto-related litigation, it has not fully replaced the reduction in SEC enforcement actions.  The changing nature of crypto-related claims could have a significant impact on D&O underwriters operating in the sector. The NERA report provides a useful framework for evaluating the D&O implications of these developments.

A link to the NERA report published by Simona Mola, Ph.D. can be found here.

Continue Reading Crypto D&O Risk Is Evolving

Continuation Vehicles (CVs) have grown in popularity with private equity (PE) firms as traditional exit routes, such as IPOs and strategic sales, have become unfavorable due to geopolitical turmoil, macroeconomic and AI- driven disruption.  However, the same features that make CVs attractive for PE sponsors may also create D&O and E&O exposure, as sponsors typically control key aspects of the transaction, including valuation, process design, and investor disclosures.

Continue Reading Continuation Vehicles and Private Equity Management Liability Risk

A securities class action filed against ZoomInfo Technologies, Inc. and certain of its directors and officers on June 25, 2026, highlights what may be the next phase of AI-related securities litigation. Unlike many earlier AI-related lawsuits, which alleged that companies overstated their AI capabilities, the Zoom complaint alleges that the company accurately described its AI initiatives but failed to disclose that AI was simultaneously disrupting its legacy business model.

If this theory gains traction, it could represent another evolution in AI-related securities litigation: from alleged AI washing to alleged underdisclosure of AI-related business risks.

Continue Reading AI-Related Securities Litigation Continues to Evolve

The third episode of The D&O Diary Podcast Series is now live. Building on our June 30, 2026, post discussing first-half federal court securities class action lawsuits, this episode explores the factors and  trends driving the number of current suit filings.

In this podcast, we discuss the overall increase in the total number of federal court securities suits during the first six months of 2026; the continued emergence of AI-related securities litigation; and the significant role that stock manipulation and promotion-related claims in the number of securities suits that have been filed so far this year. We also examine what these developments may mean for public companies, directors and officers, and D&O insurers in the months ahead.

Continue Reading The D&O Diary Podcast Series – Episode 3: Securities Class Action Suit Filing Trends

For more than two decades, The D&O Diary has chronicled successive waves of securities litigation involving foreign companies with shares listed on U.S. exchanges. The Chinese reverse merger cases of the early 2010s centered on alleged accounting fraud. More recently, a new cluster of lawsuits has emerged involving low-float stocks, artificial intelligence announcements, SPACs, and alleged market manipulation. 

A lawsuit filed in the Southern District of Texas on June 23, 2026, brings many of these themes together and may signal an emerging variant of cross-border securities fraud. The complaint combines four themes that have increasingly appeared in D&O litigation: sanctions, cryptocurrency, low-float trading, and cross-border market manipulation.

Continue Reading New Lawsuit Suggests Evolution in Cross-Border Securities Fraud