August 5, 2014
In Halliburton Co. v. Erica P. John Fund, Inc. (Halliburton II), the US Supreme Court addressed directly the fraud on the market presumption of reliance in securities class actions. Although it preserved the presumption, the Supreme Court confirmed that defendants may rebut it at the class certification stage by showing that any specific misrepresentation did not impact the market price of the company’s stock. Practical Law asked Greg Markel of Cadwalader, Wickersham & Taft LLP to examine the decision and explain how it will affect securities litigation in the future.
In particular, Mr. Markel addresses:
- The history of the fraud on the market presumption of reliance and how it has impacted securities class action litigation.
- The critiques of the presumption leading up to the Supreme Court’s decision in Halliburton II.
- How the Supreme Court clarified and refined the use of the presumption.
- The use of expert analysis in securities class actions, and how this type of analysis may increase in the early stages of securities litigation as a result of Halliburton II.
- How Halliburton II may impact the costs associated with securities class actions.
- The practical implications of how certification motions in securities class actions now will be handled.
- Whether Halliburton II is likely to influence the number of securities class actions that are filed or certified in federal court.
- Possible motivations for Chief Justice Roberts’ approach in the opinion.
To learn more, see Expert Q&A on the Fraud on the Market Presumption.