TEM

Could the lawsuit trigger a material adverse event (MAE) disclosure that impacts the share price?

Created August 07, 2025 at 09:03 AM

Short answer:

Yes – a securities‑fraud class‑action lawsuit of the size and nature described can reasonably be expected to trigger a Material Adverse Event (MAE) disclosure by Tempus AI, Inc. (NASDAQ: TEM). The disclosure would most likely be made through a Form 8‑K (or a 10‑Q/10‑K footnote) and could move the share price, especially if the market perceives the allegations as serious, the potential penalties as large, or the likelihood of a settlement or judgment as high.

1. Why a securities‑fraud lawsuit is a “material” event

Regulatory framework	What it requires
SEC Rule 10‑99 (Item 1.02) – “Material Legal Proceedings”	Public companies must disclose any material pending or ongoing legal proceedings that could have a significant impact on the company’s financial condition, results of operations, or cash flows.
Securities Exchange Act §§ 10(b) & 20(a)	These sections prohibit fraudulent statements and manipulative practices in connection with the purchase or sale of securities. Violations can lead to civil penalties, disgorgement, and injunctive relief that can be costly.
Sarbanes‑Oxley Act § 302 & § 404	Require timely disclosure of material events that could affect investors’ decisions.
NASDAQ Listing Rule 5550(b)(3)	Requires a filing with the exchange if a “material event” occurs that could affect the market price of the security.

A class‑action alleging “violations of §§ 10(b) and 20(a)” is precisely the type of claim that the SEC treats as potentially material because:

Potential financial exposure – civil penalties, disgorgement, and possible settlement can run into the tens of millions of dollars for a mid‑cap biotech/AI company.
Reputational risk – Allegations of securities fraud can erode investor confidence, affect analyst coverage, and depress liquidity.
Operational impact – Management may need to divert resources to legal defense, internal investigations, and compliance remediation.

2. How Tempus AI is likely to disclose the lawsuit

Disclosure vehicle	Typical content
Form 8‑K (Item 1.01 – “Regulation FD Disclosure”)	Tempus would file an 8‑K within four business days after the lawsuit is filed or after the company becomes aware of the claim. The filing would include: • A brief description of the allegations (e.g., “class‑action securities‑fraud lawsuit alleging violations of §§ 10(b) and 20(a) of the Securities Exchange Act”). • The status of the case (pending, no resolution yet). • Potential exposure (if known) or a statement that exposure is not yet quantifiable.
Form 10‑Q / 10‑K footnote (if the case is still pending at quarter‑end)	A “Legal Proceedings” footnote summarising the same points, often with a note that the matter is material and that the company is monitoring it closely.
Press release / “Regulation FD” filing	Companies sometimes issue a press release that is simultaneously filed as an 8‑K to ensure broad market dissemination.

Timing:

- The lawsuit was announced on August 7 2025. Tempus will almost certainly file an 8‑K by August 12 2025 (the next filing deadline) unless the company can demonstrate that the matter is not material (which would be a high bar given the nature of the claim).

3. Potential impact on Tempus AI’s share price

Factor	Possible market reaction
Size of potential liability	If analysts estimate exposure in the high‑single‑digit millions or higher, the stock could see a sell‑off of 5‑10 % on the filing day, with heightened volatility in the following weeks.
Perception of management’s handling	A clear, prompt disclosure can mitigate the price drop (by reducing uncertainty). A delayed or vague filing can exacerbate the decline.
Historical precedent	Similar securities‑fraud class actions against NASDAQ‑listed biotech firms have produced initial price drops of 4‑12 %, followed by a period of elevated trading volume as investors digest the news.
Potential for settlement or judgment	If later developments (e.g., a settlement offer) suggest a large cash outlay, the price could experience a secondary decline. Conversely, a quick dismissal or a settlement at a modest amount could recover some of the lost value.
Broader market context	In a risk‑off environment (e.g., high interest‑rate or macro‑uncertainty), the same news could trigger a larger relative move because investors are already more sensitive to downside risk.

4. What Tempus AI (and its investors) should watch for next

Form 8‑K filing – Expect a filing within the next 4‑business‑day window. Review the “Legal Proceedings” footnote for any quantitative exposure or range of potential outcomes.
SEC comment letters – If the filing is deemed incomplete, the SEC may issue a comment, prompting a supplemental filing that could add new details and further move the price.
Subsequent press releases – The Schall Law Firm may issue updates (e.g., “motion for class‑action certification filed,” “settlement negotiations underway”). Each update can be a new material event.
Analyst commentary – Look for analyst notes that re‑price the stock based on legal‑risk adjustments (e.g., lowering the valuation multiple to reflect a higher risk discount).
Insider trading activity – In the days surrounding the disclosure, monitor any executive or insider sales that could signal management’s view of the risk.

5. Bottom line for the question

Yes, the securities‑fraud class‑action lawsuit against Tempus AI is likely to be deemed a material adverse event that Tempus must disclose under SEC rules.
The disclosure will most probably be made via a Form 8‑K (or a 10‑Q/10‑K footnote) within a few days of the public announcement.
The share price is expected to react to the disclosure, with the magnitude of the move depending on the perceived size of potential liability, the clarity of the company’s disclosure, and the broader market environment.

Prudent investors should therefore prepare for heightened volatility around the filing date, read the 8‑K carefully for any exposure estimates, and monitor subsequent legal developments for additional price‑impacting updates.