C3.ai Faces Securities Fraud Class Action: Are Investors Misled About CEO’s Health Impact?
Introduction:
The intersection of artificial intelligence (AI) and investment carries inherent risks, but what happens when a company’s leadership health becomes a focal point of investor concern? C3.ai, Inc. (NYSE: AI), an enterprise AI application software company, is currently facing a securities fraud class action lawsuit that raises critical questions about transparency, executive health, and investor confidence. The lawsuit alleges that C3.ai misled investors by downplaying the impact of CEO Thomas Siebel’s health issues on the company’s financial performance and future prospects. This has led to significant financial losses for investors, with the company’s stock price plummeting after the disclosure of disappointing financial results and the CEO’s health-related challenges. According to recent reports, C3.ai’s stock has declined nearly 50% year-to-date, reflecting the severity of the situation.
Understanding the C3.ai Class Action Lawsuit
The C3.ai class action lawsuit, Liggett v. C3.ai, Inc., No. 25-cv-07129 (N.D. Cal.), seeks to represent investors who purchased or acquired C3.ai securities between February 26, 2025, and August 8, 2025. The lawsuit alleges violations of the Securities Exchange Act of 1934, specifically targeting C3.ai and certain of its top executives. The core of the complaint revolves around the claim that C3.ai created a false impression of the company’s financial health and growth potential while minimizing the risks associated with CEO Thomas M. Siebel’s health concerns.
Key Allegations
The lawsuit alleges that C3.ai made several misrepresentations and omissions, including:
- Misleading statements about revenue outlook and anticipated growth: Investors claim that C3.ai’s disclosures were not as transparent as they should have been, leading to financial losses once the truth was revealed.
- Minimizing the impact of CEO’s health concerns: The company is accused of downplaying the extent to which the CEO’s health issues affected the company’s ability to close deals and execute its business strategy.
- False or misleading statements: The lawsuit asserts that C3.ai’s public statements about its business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
The Timeline of Events
The events leading to the class action lawsuit can be traced back to early 2025 when CEO Thomas Siebel was diagnosed with an autoimmune disease that caused significant visual impairment. Despite these health challenges, Siebel initially assured investors that his health was “excellent” and that he was fully engaged in managing the company.
However, by July 2025, Siebel announced his intention to step down as CEO due to health concerns. This announcement was followed by a significant drop in C3.ai’s stock price, with shares closing 11% lower on the news.
In August 2025, C3.ai released preliminary financial results for the first quarter of fiscal year 2026, revealing revenue significantly below guidance. The company attributed the underperformance to Siebel’s health issues, which had allegedly impacted deal execution more than previously communicated. On this news, the price of C3.ai stock fell more than 25%.
The Role of CEO Health in Investor Decisions
The C3.ai case raises important questions about the role of executive health in investor decisions. While it is not uncommon for CEOs to face health challenges, the extent to which these challenges impact a company’s performance and the transparency with which they are disclosed can significantly affect investor confidence.
In the case of C3.ai, the lawsuit alleges that the company failed to adequately disclose the impact of the CEO’s health issues on its ability to close deals and achieve its financial targets. This lack of transparency, the lawsuit claims, misled investors and caused them to suffer financial losses.
Securities Fraud Class Actions: An Overview
A securities fraud class action is a lawsuit filed by investors who have suffered financial losses as a result of false or misleading statements made by a company about its financial health, operations, or prospects. These lawsuits typically allege violations of the Securities Exchange Act of 1934, which prohibits companies from making untrue statements of material fact or omitting material facts necessary to make their statements not misleading.
Key Players in a Securities Fraud Class Action
- Lead Plaintiff: The lead plaintiff is an investor who represents the interests of the entire class of investors who have suffered losses.
- Class Counsel: The class counsel is the law firm that represents the lead plaintiff and the entire class.
- Defendants: The defendants are the company and its executives who are accused of making false or misleading statements.
Requirements for a Securities Fraud Class Action
To succeed in a securities fraud class action, the plaintiffs must prove several elements, including:
- A false or misleading statement: The plaintiffs must prove that the company made a false or misleading statement of material fact or omitted a material fact necessary to make its statements not misleading.
- Scienter: The plaintiffs must prove that the company acted with scienter, meaning that it knew or recklessly disregarded the fact that its statements were false or misleading.
- Reliance: The plaintiffs must prove that they relied on the company’s false or misleading statements when making their investment decisions.
- Loss causation: The plaintiffs must prove that the company’s false or misleading statements caused them to suffer financial losses.
The Private Securities Litigation Reform Act (PSLRA)
The Private Securities Litigation Reform Act (PSLRA) of 1995 is a federal law that governs securities fraud class actions. The PSLRA was enacted to curb frivolous lawsuits and protect companies from meritless claims.
Key Provisions of the PSLRA
- Lead Plaintiff Selection: The PSLRA establishes a process for selecting a lead plaintiff in securities fraud class actions. The lead plaintiff is typically the investor with the largest financial interest in the case.
- Pleading Requirements: The PSLRA imposes heightened pleading requirements on plaintiffs in securities fraud class actions. Plaintiffs must state with particularity the facts constituting the alleged fraud.
- Safe Harbor for Forward-Looking Statements: The PSLRA provides a safe harbor for forward-looking statements made by companies, as long as those statements are accompanied by meaningful cautionary language.
Implications for C3.ai Investors
The C3.ai class action lawsuit has significant implications for investors who purchased or acquired C3.ai securities between February 26, 2025, and August 8, 2025. These investors may be eligible to recover financial losses if the lawsuit is successful.
Lead Plaintiff Deadline
Investors who wish to serve as lead plaintiff in the C3.ai class action lawsuit must file a motion with the court by October 21, 2025. Serving as lead plaintiff is not required to share in any potential recovery.
How to Participate
Investors who believe they have suffered losses as a result of C3.ai’s alleged misrepresentations can take several steps to protect their rights:
- Contact a securities litigation law firm: Investors should contact a qualified securities litigation law firm to discuss their legal options and determine whether they are eligible to participate in the class action lawsuit.
- Preserve documents: Investors should preserve all documents related to their investment in C3.ai securities, including purchase and sale records, brokerage statements, and any communications with the company.
- Monitor the case: Investors should monitor the progress of the class action lawsuit and attend any court hearings or settlement conferences.
The Future of C3.ai
The C3.ai class action lawsuit comes at a time of transition for the company. In July 2025, C3.ai announced that CEO Thomas Siebel would be stepping down due to health concerns. The company has initiated a search for a new CEO to lead the company forward.
The outcome of the class action lawsuit and the success of the new CEO will be critical factors in determining the future of C3.ai. The company faces significant challenges, including declining revenue, widening losses, and a loss of investor confidence. However, C3.ai also has significant opportunities in the growing market for enterprise AI solutions.
Call to Action
If you are an investor who purchased or acquired C3.ai securities between February 26, 2025, and August 8, 2025, and have suffered financial losses, it is crucial to take action to protect your rights. Contact a securities litigation law firm today to discuss your legal options and determine whether you are eligible to participate in the C3.ai class action lawsuit.