Law firms enjoyed a glut of initial public offering work during the first half of 2026, capped by SpaceX’s record-setting IPO in June. And the second half of the year looked promising as well, with looming IPOs by AI giant Anthropic, among others.
But what the stock market giveth, it can quickly taketh away. In recent weeks, companies have been delaying or canceling their IPOs, amid concerns about interest rates, global economic and political turmoil, too-frothy valuations and public backlash over AI safety and data center development. (In August, we wrote about the IPO boom and warning signs it may not last.)
While none of this is great news for their transactional practices, law firms may be able to take heart from an uptick in another segment of market-related work: securities litigation. Thanks, in part, to the surge in IPOs, the first half of 2026 saw a spike in securities class action filings. And the likelihood that a U.S.-listed company would be sued reached its highest level in at least seven years, according to recent data compiled by Cornerstone Research.
- IPO momentum is cooling: 121 securities class actions were filed in the first half of 2026, putting issuers and underwriters on alert.
- Section 11 claims can target companies, directors, officers and underwriters for IPO disclosure errors, even without intentional misconduct.
- Recent rulings offer defenses involving share tracing, loss causation and federal-court venue provisions.
- Deal counsel should strengthen risk disclosures, document diligence, review insider transactions and reassess insurance before the next market shift.
Still on Track?
That said, the IPO market is not completely moribund, at least not yet. At this point, the biggest offering on the horizon, the market debut of Anthropic, is still advancing. Bloomberg reported in early October that the company may start marketing its IPO the week of Nov. 9, with trading to begin sometime before Thanksgiving. If Anthropic lists at the $1.8 trillion to $2 trillion valuation investors expect, it will top the IPO record set by SpaceX.
The company’s plans could shift on a dime, however. Anthropic’s rival OpenAI, which also filed for an IPO earlier this year, pushed its offering back to 2027. And Bloomberg noted that Anthropic, which is reportedly being counseled by Wilson Sonsini Goodrich & Rosati, was slated to convene with investors on Oct. 14 in preparation for the IPO.
Should enthusiasm among those investors wane or market conditions deteriorate further, the company may not take the risk. As Samuel Kerr, Mergermarket’s global head of equity capital markets, told Reuters in late September, even businesses with “spectacular economics” are facing greater scrutiny from investors. The IPO market, he said, is “very different … to the one we envisaged just a few weeks ago."
Delayed Deals
If it did decide to pull back at the last minute, Anthropic would not be alone. On Sept. 29, smart ring maker Oura did just that, deciding hours before its planned Nasdaq listing to pull its IPO. The company cited market uncertainty, although Fortune and others have reported that investors were also skeptical about the company’s $15 billion+ valuation.
Ten days later, on Oct. 9, Firmus Grid Ltd., an Australian data center operator backed by Nvidia, pulled its IPO in favor of a private fundraising round. According to Reuters, the company’s debut would have been the second-largest in Australia’s history. But the offering met with “lukewarm demand,” a signal, Reuters said, that investors are “becoming increasingly selective about AI issuers.”
Other IPOs delayed or canceled since the end of summer include: AirTrunk, a Blackstone-backed data center operator; VITRO REIT, another data center company; Holtec Nuclear, a New Jersey-based nuclear equipment maker; homeowners insurance underwriter Bamboo Insurance Services; and Amaero, an advanced materials manufacturer.
Post-IPO Suits
Meanwhile, according to the Cornerstone data, plaintiffs filed 121 new securities class actions in the first half of 2026, and if the filings continue apace, 2026 could see the most cases since 2019. Those numbers contrast sharply with 2025, when securities class action filings declined 11% year over year, according to figures published by Jones Day.
The previously booming IPO market has given plaintiffs’ firms a potentially target-rich environment. In July, for instance, a putative securities class action in the U.S. District Court for the Southern District of New York was filed against EquipmentShare, a Columbia, Mo.-based company that rents construction equipment and tools.
The suit alleges that EquipmentShare misled investors in its January 2026 IPO about transactions with business entities controlled by the company’s founders. After a report about the transactions emerged in June, the company’s stock price plummeted, harming investors, the suit alleges. EquipmentShare, which acknowledged the suit in SEC filings, said the claims “are without merit.”
In another proposed class action, plaintiffs’ lawyers have sued Navan, a corporate travel management software provider, over allegations that the company misstated its sales and marketing expenses in its IPO offering documents. The company went public in October 2025 at $25 per share and saw its price fall as much as 63% during the next few months. The class action was filed in February. In September, Navan moved to dismiss the case.
Section 11 Risk
Both cases assert claims under Section 11 of the Securities Act of 1933, which allows purchasers to bring suit against the company, its officers and directors, and underwriters for any misrepresentation or omission of material information in an IPO registration statement. Indeed, in the EquipmentShare and Navan cases, executives, officers, directors and the underwriters were named.
Section 11, which applies to IPOs, lowers the liability bar by allowing a case to proceed even if the errors were not meant to mislead. This contrasts with the broader Rule 10b-5, which requires proof that a party in a securities transaction acted intentionally or recklessly.
Plaintiffs will have plenty of time to pursue Section 11 cases stemming from the IPO boom. Federal law allows claims to be brought under Section 11 one year from the discovery of an untrue statement or omission in IPO documents and within three years of the offering. That means a company going public in 2026 could face litigation exposure over its registration documents into 2029.
A Stronger Defense Arsenal
That doesn’t mean plaintiffs will have a free pass. In recent years, the courts have given defendants new tools to fight securities class actions, ones that often depend on the way the transaction is structured.
In 2023’s Slack Technologies, LLC v. Pirani, the U.S. Supreme Court ruled that investors bringing claims under Section 11 must be able to trace the shares they purchased directly to the specific registration statement that allegedly misled them. As Linklaters noted in 2025, the decision sets a high bar for purchasers whose shares may be traded alongside others, making it hard (if not impossible) to tell them apart.
The court’s decision was put to the test in 2025’s Shnayder v. Allbirds, Inc., a case in the U.S. District Court for the Northern District of California. The court rejected a Section 11 claim against Allbirds, which allowed employees to sell some of their shares to the public at the same time as the company’s IPO. Paul, Weiss, Rifkind, Wharton & Garrison, in an analysis of the decision, wrote that the case “further extends Slack’s reasoning to traditional IPOs” and suggests that companies “may frustrate investors’ ability to trace their shares to an IPO registration” by allowing such stock sales.
In another 2025 case, California’s Northern District also found that companies can avoid paying damages if they can prove that their stock prices fell for reasons other than an alleged misstatement in a registration. The decision, involving a case against software company Freshworks Inc., said that Section 11 plaintiffs may not recover losses if the share price declines but still exceeds the IPO price. The court also held that a company does not have to account for a stock decline that was not caused by information missing from its IPO documents.
Plaintiffs may run into forum issues as well if they attempt to fight in state courts. The Delaware Supreme Court ruled in 2020 that companies may adopt a bylaw requiring securities suits be filed in federal court. In 2022, the California Court of Appeal relied on that decision to affirm the dismissal of a Section 11 suit against Dropbox. In essence, a company preparing to go public could limit its state-court exposure by adopting a simple provision of this sort.
The AI Factor
While those defenses apply to any company going public, AI companies may be facing an added layer of scrutiny. Cornerstone Research, in its midyear review of court filings, found 15 AI-related securities class actions had been filed in the first half of 2026. By way of comparison, only 16 such cases were filed for all of 2025.
Suits against AI companies often allege that they failed to disclose risks or overstated what their technology could do (also known as “AI washing”). This ups the ante for companies in how they describe their technology, support their valuation or lay out risks in an IPO prospectus.
In May, the U.S. Court of Appeals for the Second Circuit gave defendants some protection on risk disclosures, however. The court ruled, in a case against Gap, that a company does not mislead investors just by warning them about a risk, unless it described the risk as merely hypothetical.
What ensues from Anthropic’s IPO may provide a major test of these issues. The company has not been sued and may not be. But its prospectus is likely to become a model for companies that follow it to market and will almost certainly be scrutinized by plaintiffs’ firms if the company’s stock drops precipitously.
Looking Ahead
The suits and recent court decisions point to a few steps counsel and issuers should be considering.
For pre-IPO companies, that can include describing real risk factors in concrete terms rather than as hypotheticals, taking care in describing what AI technology can do, adopting a federal forum provision, weighing whether the company should allow employees or others to trade shares alongside the IPO, and reviewing insurance coverage for directors and officers.
Companies that have recently gone public should be prepared to fully disclose dealings with insiders and to weather the fallout should early earnings miss and stock prices decline. Underwriters, too, should maintain a thorough record of their due diligence efforts, as it could be a critical defense against Section 11 claims.
More will be coming soon. If Anthropic moves ahead with a record-setting IPO in November, the stakes will likely rise for every AI company that follows. And the courts may offer their next signal on Section 11 at Navan’s motion to dismiss hearing in January. Stay tuned.
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David L. Brownis a legal affairs writer and consultant, who has served as head of editorial at ALM Media, editor-in-chief of The National Law Journal and Legal Times, and executive editor of The American Lawyer. He consults on thought leadership strategy and creates in-depth content for legal industry clients and works closely with Best Law Firms as senior content consultant.