What's Happening?
The legal landscape in 2026 is anticipated to be heavily influenced by event-driven securities litigation, particularly those involving artificial intelligence (AI). The rise in AI-related securities cases
is attributed to the challenges companies face in quantifying AI capabilities and the potential for misrepresentation. Between 2021 and 2023, there were six to eight AI-related securities cases annually, which increased to 15 in 2024 and 12 in the first half of 2025. This trend is expected to continue as companies navigate the complexities of AI performance claims. Courts have begun to scrutinize statements about AI, distinguishing between inactionable optimistic statements and actionable material misstatements. The Securities and Exchange Commission (SEC) has also clarified its stance on mandatory arbitration provisions in company documents, which could influence future litigation strategies.
Why It's Important?
The increasing prevalence of AI-related securities litigation highlights the growing importance of transparency and accuracy in corporate communications about AI capabilities. Companies that fail to adequately disclose the limitations and risks associated with AI may face significant legal challenges. This trend underscores the need for businesses to carefully document and substantiate claims about AI to avoid litigation. The SEC's policy on arbitration provisions could reshape how securities cases are litigated, potentially leading to more companies adopting such provisions. This shift could have long-term implications for shareholder rights and the legal strategies employed by corporations.
What's Next?
As AI-related securities litigation continues to rise, companies will need to be vigilant in their disclosures and marketing language regarding AI capabilities. The potential for mandatory arbitration provisions to become more common in corporate documents could lead to significant changes in how securities disputes are resolved. Additionally, the outcome of ongoing legal debates, such as the applicability of the Private Securities Litigation Reform Act to RICO claims, could further influence the legal landscape. Companies will need to stay informed about these developments to effectively manage legal risks associated with AI.
