Court Requires Showing of Stock Price Movement to Allow Class Action
The U.S. District Court for the Southern District of New York rejected class certification in a securities fraud case, because the plaintiffs could not demonstrate that the alleged misstatements had an effect on defendant’s stock price. The plaintiffs argued that reliance as a class should be presumed rather than proved on an individual basis. The court rejected this “fraud-on-the-market” theory because the defendant’s stock price did not materially move when the New York Attorney General announced an investigation into the facts underlying the alleged misrepresentations. The Court concluded: “[I]ssues subject to individualized proof would predominate over common issues with respect to each of [plaintiff’s] claims.”
OUR TAKE: Requiring proof of individual reliance where a purported class cannot demonstrate stock price movement will make class certification very difficult.
http://www.law.com/jsp/nylj/CaseDecisionNY.jsp?id=1202471663410&slreturn=1&hbxlogin=1
OUR TAKE: Requiring proof of individual reliance where a purported class cannot demonstrate stock price movement will make class certification very difficult.
http://www.law.com/jsp/nylj/CaseDecisionNY.jsp?id=1202471663410&slreturn=1&hbxlogin=1
Posted by Todd Cipperman at 9/7/2010 7:00 AM 
Categories: Funds
Tags: securities fraud class action certification
Categories: Funds
Tags: securities fraud class action certification
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