On Monday, the U.S. Supreme Court saved securities class-action plaintiffs from their worst nightmare and upheld the fraud-on-the-market presumption of reliance in securities class actions filed under Section 10(b) of the Securities Exchange Act of 1934. At the same time, however, the Court ruled that defendants have a right to rebut the presumption before class certification with evidence of lack of price impact. Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317, 573 U.S. __ (June 23, 2014).
The Halliburton decision will almost certainly spawn significant litigation in lower courts over the extent in practice of plaintiffs’ burden to prove market efficiency, defendants’ burden to rebut it and implications on loss causation.
Click here to read our client alert on the decision.