Supreme Court Upholds “Fraud on the Market” Presumption But Allows Evidence of Lack of Price Impact at the Class Certification Stage
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- In Halliburton Co. v. Erica P. John Fund, the Supreme Court declined to overrule the “fraud on the market” presumption of reliance in Rule 10b-5 claims, but it held that a defendant may rebut that presumption at the class certification stage by introducing evidence that the alleged misrepresentation did not affect the stock price.
- The Halliburton decision will increase defendants’ focus on class certification as a substantial obstacle for putative securities class actions. It remains to be seen whether this new basis for defendants to attack class certification will lead to a substantial increase in the frequency of defense victories at that stage.