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Supreme Court to Review “Fraud on the Market” Presumption of Reliance in Securities Class Actions
21 November 2013
On November 15, 2013, the U.S. Supreme Court agreed to consider two questions that have the potential to transform the landscape of private securities litigation.
In granting a writ of certiorari in Halliburton Co. v. Erica P. John Fund, the Court agreed to review: (i) whether the “fraud on the market” presumption of reliance that is at the core of securities class action practice should be overruled or substantially modified; and (ii) whether, in a class action, a defendant may rebut the presumption and defeat class certification by introducing evidence that the alleged misrepresentations did not distort the market price of the defendant’s stock.
This much watched case is a potential game-changer for securities litigation: if the Court overrules or substantially limits the “fraud on the market” presumption, plaintiffs will find it much more challenging to obtain class certification in securities fraud cases.
Mark P. Goodman
John S. Kiernan
Shannon Rose Selden
William H. Taft V
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