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Securities litigation may not be the first concern that comes to mind when war or armed conflict erupts. But in a legal environment where some observers quip that “[e]verything [e]verywhere is securities fraud,”1 public companies cannot afford to treat geopolitical instability as a distant or purely operational issue. Wars do more than reconfigure international relations—they can disrupt supply chains, heighten cybersecurity vulnerabilities, complicate sanctions compliance, and fuel significant commodity price volatility. Each of these effects (and more) can precipitate material stock price declines that attract plaintiffs’ lawyers and spur shareholder suits.
In the wake of the Iran War, the intersection of armed conflict and corporate disclosures should remain a focus for all issuers—especially those in industries most exposed to global disruption.
The Rise of Event-Driven Securities Litigation
Event-driven securities fraud lawsuits have become a defining feature of the modern shareholder litigation landscape.2 Unlike traditional securities fraud cases focused on allegedly misstated financials or alleged accounting improprieties, these suits concern allegedly “under disclosed risks that impact future performance rather than misstatements concerning historical financial results.”3
The pattern is familiar: an event causing a negative company-specific impact occurs, a company’s stock price drops, and plaintiff lawyers investigate whether the company’s earlier disclosures can be recast in hindsight as materially misleading. The theory is often one of omission—based on an alleged failure to adequately disclose risks or vulnerabilities—or involving overly optimistic descriptions of business conditions that supposedly understate the likelihood of negative events.4
Although these claims frequently follow corporate crises such as environmental disasters or major product defects, armed conflict arguably constitutes the oldest and most sweeping form of disruptive event, capable of affecting nearly all aspects of a company’s operations.
Geopolitical Crises of the Recent Past Provide Insight
Recent history shows that armed conflict and geopolitical instability can and do give rise to securities litigation, both directly and indirectly. After Russia invaded Ukraine in 2022, for instance, investors filed the first Ukraine-related securities class action within weeks, alleging that a major bank had understated risks associated with sanctions targeting Russian oligarchs.5 In another example, a technology company was sued in 2024 for allegedly misrepresenting its compliance with trade control regulations restricting exports to Russia.6
For its part, the SEC has already cautioned that public companies may have disclosure obligations under the federal securities laws associated with such geopolitical events. In 2022, the SEC’s Division of Corporation Finance issued a sample comment letter suggesting that the Russian invasion of Ukraine, and the international response, may require public companies to provide detailed disclosure of material direct or indirect impacts on their business.7
Against this backdrop, the implications for the Iran War are clear. Given the war’s outsized impact on the energy sector and global oil supply—with ripple effects on transportation, manufacturing, and other downstream industries—there is little reason to expect that this conflict will be exempt from similarly significant disruptions and the corresponding risk of securities-fraud litigation.
Pragmatic Steps to Mitigate Risk of Securities Litigation
For issuers, careful and proactive scrutiny of disclosures is essential. Public companies should regularly reassess their risk factors and Management’s Discussion and Analysis (“MD&A”) to ensure they accurately reflect evolving geopolitical conditions and the attendant risks that may materially impact the company. Such scrutiny is necessary because investors—and, by extension, shareholder-plaintiffs’ counsel—will second-guess such cautionary language in the event that a risk materializes out of the Iran War and disrupts the company’s business.
The Private Securities Litigation Reform Act of 1995 (the “PSLRA”) remains a powerful shield in this context. Its statutory “safe harbor” insulates a corporation’s forward-looking statements from liability when they are identified as such and accompanied by “meaningful cautionary language” that specifically highlights the “important factors that could cause actual results to differ materially from those in the forward looking statement.”8 Cautionary language that is unduly generic or itself false or misleading, however, is more susceptible to an attack by shareholder-plaintiffs.
Issuers must therefore strive to craft cautionary statements that are substantive, company‑specific, and tied to the real‑world risks the issuer faces.9 In the context of armed conflict, that could include, for instance, explicit discussion of supply‑chain vulnerabilities, exposure to sanctioned jurisdictions, sensitivity to commodity price volatility, and the risks to physical assets, employees, or investments, as well as other conflict-sensitive aspects of the business that could materially affect performance.10
At the same time, the law governing risk disclosures is not entirely uniform across jurisdictions, and critical questions remain unresolved. In 2024, the Supreme Court dismissed a case as improvidently granted and declined to resolve a circuit split over whether risk disclosures can be false or misleading when a company presents a risk as merely hypothetical rather than disclosing that the risk had already materialized, even if there is no currently known threat of ongoing or future business harm.11
The Ninth Circuit had answered “yes” to that question, holding that failing to disclose a past occurrence could mislead investors, while the Second, Fifth, and Tenth Circuits apply a “virtual certainty” test, under which disclosure is required only if the past materialized risk is virtually certain to cause harm. This divergence injects uncertainty into compliance efforts and leaves issuers in a position where what suffices in one jurisdiction may face heightened scrutiny in another.
As a result, public companies should proceed cautiously and work closely with counsel to ensure their disclosures are appropriately calibrated to both the evolving geopolitical environment and the unsettled state of the law.
Footnotes
1.Matt Levine, Everything Everywhere Is Securities Fraud, Bloomberg (June 26, 2019), available at https://www.bloomberg.com/opinion/articles/2019-06-26/everything-everywhere-is-securities-fraud (last visited Apr. 2, 2026).
2.See, e.g., Gideon Mark, Event-Driven Securities Litigation, 24 U. Pa. J. Bus. L. 522, 524–29 (2022).
3. Merritt B. Fox & Joshua Mitts, Event-Driven Suits and the Rethinking of Securities Litigation, 78 Bus. Law. 1, 3 n.2 (2023), available at https://securities.stanford.edu/academic-articles/20230526-event-driven-suits-and-the-rethinking-of-securities-litigation.pdf (last visited Apr. 2, 2026).
4.See, e.g., Donald C. Langevoort, Disasters and Disclosures: Securities Fraud Liability in the Shadow of a Corporate Catastrophe, 107 Geo. L.J. 967, 970–71 (2019), available at https://www.law.georgetown.edu/georgetown-law-journal/wp-content/uploads/sites/26/2019/04/4Disasters-and-Disclosures_Securities-Fraud-Liability-in-the-Shadow-of-a-Corporate-Catastrophe_Langevoort.pdf (last visited Apr. 2, 2026).
5.March Bosch v. Credit Suisse Grp. AG, et al., No. 1:22-cv-02477-ENV-RLM, at Dkt. 1 (E.D.N.Y. Apr. 29, 2022).
6.Norfolk Cnty. Ret. Sys. v. Super Micro Computer, Inc., et al., No. 4:24-cv-06980-JST, at Dkt. 1 (N.D. Cal. Oct. 4, 2024).
7.https://www.sec.gov/rules-regulations/staff-guidance/disclosure-guidance/sample-letter-companies-regarding-disclosures (last visited Apr. 2, 2026).
8.15 U.S.C. § 78u-5(c)(A)(i).
9.See, e.g., Southland Sec. Corp. v. INSpire Ins. Sols., Inc., 365 F.3d 353, 372 (5th Cir. 2004) (“The requirement for ‘meaningful’ cautions calls for ‘substantive’ company-specific warnings based on a realistic description of the risks applicable to the particular circumstances, not merely a boilerplate litany of generally applicable risk factors.”).
10. https://www.sec.gov/rules-regulations/staff-guidance/disclosure-guidance/sample-letter-companies-regarding-disclosures (last visited Apr. 2, 2026).
11.Facebook, Inc. v. Amalgamated Bank, 604 U.S. 4 (2024).
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