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Supreme Court Upholds “Fraud on the Market” Presumption But Allows Evidence of Lack of Price Impact at the Class Certification Stage
24 June 2014
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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.
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.
Gary W. Kubek
Colby A. Smith
Jonathan R. Tuttle
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