Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Securities Law
Use Of Economic Analysis In Fraud On The Market Cases, Janine S. Hiller, Stephen P. Ferris
Use Of Economic Analysis In Fraud On The Market Cases, Janine S. Hiller, Stephen P. Ferris
Cleveland State Law Review
In 1988, in Basic, Inc. v. Levinson,1 (Basic), the United States Supreme Court adopted the fraud on the market theory in order to create a presumption of reliance in a Security & Exchange Commissions Rule 10(b) securities fraud case. This article first explains the economic and legal background behind the fraud on the market presumption. Then, the landmark case of Basic is examined for guidance in applying the presumption and proving defenses to that presumption. Lastly, it is shown how economic analysis can be used in proving or disproving fraud on the market, including an empirical study of the events …