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Halliburton And The Dog That Didn't Bark, Ann M. Lipton

Duke Journal of Constitutional Law & Public Policy

In Halliburton Co. v. Erica P. John Fund, Inc., the Supreme Court held that defendants in a Section 10(b) class action may use the class-certification process to rebut the “fraud on the market” presumption that their misstatements impacted the price of the relevant security. In so doing, the Court struggled to explain why the class-certification process—rather than trial on the merits—was the proper venue for such disputes, and avoided the most obvious justification, namely, that in the absence of price impact, plaintiffs would still be able to bring individual claims. The Court’s unwillingness to hold that plaintiffs may bring …

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The Future Of Price Distortion In Federal Securities Fraud Litigation, Jill E. Fisch

Duke Journal of Constitutional Law & Public Policy

In its recent Halliburton decision, the Supreme Court focused on the role of price distortion in meeting the requirements for class certification in private securities fraud litigation. Accepting the argument that the fraud-on-the-market theory requires fraudulent information to have an effect on stock price, the Court reasoned that defendants should therefore be allowed to introduce evidence of lack of price impact in an effort to defeat class certification. Specifically, the Court suggested that defendants might introduce event studies as direct evidence that could sever the link between the misrepresentation and stock price.

This conclusion, however, misapprehends the event study methodology. …

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