The emergence of artificial intelligence (AI) technology presents an enormous opportunity for many companies and indeed for commerce generally. It also presents an enormous challenge for companies trying to establish themselves as one of the winners in the AI scramble. Among the prominent companies involved in this scramble are several of the technology giants, including
A recent decision in the long-running securities litigation involving Cutera, Inc. serves as a potent reminder of the complex interplay between securities class actions and Chapter 11 restructuring. In a May 11, 2026, order, the Northern District of California dismissed the suit against Cutera and its former executives, ruling that claims against the company were legally discharged via its bankruptcy reorganization and that allegations against the individual defendants failed to meet the PSLRA’s exacting scienter standards.
Continue Reading Securities Suit Dismissed: Bankruptcy Discharge and Scienter Deficiencies
The D&O Diary has been chronicling how securities plaintiffs continue to expand litigation theories beyond traditional “AI-washing” claims. The recent securities class action against data protection company Commvault Systems, Inc. demonstrates how AI hype and strategy can become entangled with traditional securities claims, even when actual AI integration is not the central issue of the lawsuit.
Continue Reading AI-Adjacent Securities Litigation
The recent securities and derivative litigation involving e.l.f. Beauty reflects a familiar D&O liability pattern: a high-growth narrative challenged by operational headwinds, followed by securities litigation and a derivative action. While e.l.f. and its D&Os achieved meaningful success at the motion to dismiss stage, the survival of certain securities claims and a recently filed a derivative complaint in Delaware highlights the potential of prolonged D&O exposure.
Continue Reading Securities Suit Partially Survives; Derivative Action Follows and Prolonged D&O Exposure
As followers of the financial markets know, in recent months, trouble has been brewing in the private credit sector. In at least some cases, the problems in the private credit markets have translated into D&O claims, including both securities class action lawsuits (for example, here) and shareholder derivative lawsuits (here). In the latest example of a private credit-related D&O claim, a shareholder plaintiff has filed a securities class action lawsuit against one of KKR’s private credit ventures, alleging that the firm overstated asset valuations and the effectiveness of its restructuring efforts. A copy of the May 4, 2026, securities class action lawsuit complaint can be found here.
Continue Reading Yet Another Private Credit Firm Hit With Securities Suit
According to industry reports, education technology companies experienced unprecedented demand during COVID‑19, fueled by remote learning mandates and significant public investment in digital infrastructure. School districts rapidly deployed laptops, software platforms, and immersive learning tools while students were learning remotely. However, now that classrooms have largely returned to in‑person instruction, a growing backlash against ed‑tech has begun to emerge. In the last month, both the New York Times and Wall Street Journal have reported on the backlash from educators and parents, as well as study results showing the deteriorating effect of technology use in classrooms.
This recent reporting has coincided with certain ed‑tech companies confronting tightening capital markets, operational challenges, and increasing scrutiny from investors and regulators. A complaint filed against zSpace, Inc (zSpace) and its directors and officers on April 23, 2026 (zSpace SCA), may demonstrate how these converging dynamics are now beginning to manifest in securities litigation. The following will discuss the zSpace SCA allegations, the company’s purported financial pressures, and potential D&O exposure for companies in the ed‑tech industry.
Continue Reading Ed-Tech Backlash and Emerging Securities Litigation Risk
Peloton Interactive, Inc. (Peloton) has faced well-publicized operational and reputational challenges over the past several years. The company’s trajectory, from pandemic-era growth darling to post-pandemic recalibration and product safety scrutiny, has resulted in securities litigation. As previously discussed on the D&O Diary, Peloton successfully defeated a COVID-19-related securities suit at the pleading stage. More recently, the company faced a second securities class action tied to alleged product defects in its flagship bike (Peloton SCA). In a March 31, 2026, decision, the United States District Court for the Eastern District of New York granted Peloton’s motion to dismiss, rejecting plaintiff shareholders’ attempt to convert operational challenges into actionable securities fraud.
Continue Reading Peloton SCA Dismissed: Product Safety Allegations and D&O Exposure
Amid signs of a renewed uptick in SPAC activity, courts continue to grapple with D&O insurance coverage issues arising out of older de-SPAC transactions. In a March 30, 2026, decision involving the de-SPAC of View Operating Corporation (View), the Delaware Superior Court held, in part, that View’s D&O policy “public offering” exclusion did not apply to preclude coverage for claims arising out of a de‑SPAC transaction and that additional payment conditions could not be imposed unless expressly stated in the policy.
Continue Reading Delaware Court Rejects “Public Offering” Exclusion in De-SPAC Coverage DisputeA new study highlighted on the Harvard Law School Forum on Corporate Governance, and posted by Subodh Mishra, Global Head of Communications at ISS STOXX, on Tuesday, April 14, 2026, quantifies how cyber incidents can have sustained and measurable negative impacts on shareholder value. The report, based on research conducted by ISS STOXX and ISS-Corporate (the study), analyzed cyber incidents among companies in the Russell 3000 over a multi-year period. Its findings are stark: companies experiencing significant cyber incidents underperform the broader market by approximately 5% on average over a three-year time period.
Continue Reading Cyber Incidents’ “Long Tail” Impact on Shareholder ValueIn February, I noted an emerging securities litigation trend involving pump-and-dump schemes characterized by thin public float, retail investor participation, and the amplifying effects of social media. Three subsequent pump-and-dump securities filings in February and March 2026, along with a recent federal court ruling involving social media platform liability, provide further evidence that these risks may be accelerating. Taken together, these developments have important implications for D&O liability exposure and for underwriters evaluating risks associated with low-float issuers and companies whose securities trading activity may be influenced by online promotional activity.
Continue Reading Follow-On Developments in Pump-and-Dump Litigation