Below is the first part of an article by Sergio Munoz from It reads…

The New York Times‘ DealBook: This Case Could “Put A Stake Through The Heart” Of These Class Actions. In his analysis of why decades of Supreme Court precedent aimed at effectively regulating stock markets could be at risk, legal expert Steven M. Davidoff noted that four of the conservative justices are willing to do away with a 25-year old legal doctrine. From The Times‘ DealBook on October 15, 2013:

A group of pro-corporate forces has begun a behind-the-scenes fight at the Supreme Court. You may not have heard about it, but it could just end shareholders’ ability to sue companies for securities fraud.


Halliburton is asking the Supreme Court to confront one of the fundamental tenets of securities fraud litigation: a doctrine known as “fraud on the market.”

The doctrine has its origins in the 1986 Supreme Court case Basic v. Levinson. To state a claim for securities fraud, a shareholder must show “reliance,” meaning that the shareholder acted in some way based on the fraudulent conduct of the company.

In the Basic case, the Supreme Court held that “eyeball” reliance — a requirement that a shareholder read the actual documents and relied on those statements before buying or selling shares — wasn’t necessary. Instead, the court adopted a presumption, based on the efficient market hypothesis, that all publicly available information about a company is incorporated into its stock price.


Marc Primo Pulisci is a Los Angeles based attorney practicing with Initiative Legal Group. Marc Primo Pulisci has been practicing law for over 10 years. Find Marc on Marc Primo TwitterMarc Primo MantaMarc Primo FacebookMarc Primo SquarespaceMarc Primo Dot ComMarc Primo Pulisci Dot ComMarc Primo MyspaceMarc Primo Pulisci BlogMarc Primo WordPressMarc Primo Blog Marc Primo Quora Marc Primo Foursquare Marc Primo Manta Marc Primo Merchant Circle Marc Primo Yellow Book Marc Primo Google Plus Marc Primo Law360 Marc Primo Zoho Docs Marc Primo Blogspot