Two columns from the New York Law Journal on securities litigation.
(1) In ‘Oscar’: Misinterpretation of Fraud-on-the-Market Theory (July 17 edition – subscrip. req’d), the author discusses a Fifth Circuit decision on class certification. Notably, the court held that loss causation must be established at the class certification stage of a case by a preponderance of all admissible evidence before the plaintiffs can receive the benefit of the fraud-on-the-market presumption. The author argues that the decision, handed down last year, creates an impermissibly high barrier to class certification that other circuit courts have declined to adopt.
(2) In Whither ‘Stoneridge v. Scientific-Atlanta’? Early Results (July 8 edition – subscrip. req’d), the author surveys lower court decisions that have applied the U.S. Supreme Court’s holding on scheme liability. The author argues that the Pugh (7th Cir.) and DVI (E.D.Pa.) decisions suggest courts are inclined to interpret Stoneridge “broadly and dismiss claims against any third parties, regardless of their affiliation with an issuer, who are not alleged to have participated in preparing or disseminating false financial statements or other public statements.”