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The article discusses the U.S. circuit split over the necessary requirements for loss causation in the court cases SEC v. Musk, Mineworkers' Pension Scheme v. First Solar Inc. and Dura Pharmaceuticals Inc. v. Broudo. Topics include the theories of proximate cause and loss causation, the Rule 10b-5 of the Exchange Act, and the econometric model used to measure loss causation.

The article addresses the question of how to calculate out-of-pocket damages in securities fraud class actions in the U.S. Topics discussed include direct claims and derivative claims, advantages and disadvantages of derivative actions, and claim for price inflation. Also mentioned are implications of investor diversification, the deterrent effects of successful securities fraud class actions (SFCA), and the exclusion of index investors from a class.

A panel discussion is presented between Professor Arthur R. Miller and Professor Robert Klonoff at Lewis and Clark Law School. Topics discussed include class action lawsuit under the Federal Rules of Civil Procedure; litigating cases under the Civil Rights Act and Voting Rights Act; litigating securities fraud class action.

Publicly traded life science companies must navigate two overlapping regulatory agencies with distinct disclosure policies. The Food & Drug Administration (FDA) has a policy of under-disclosure to incentivize drug development while the Securities and Exchange Commission (SEC) encourages overdisclosure to avoid securities fraud. The FDA's far-reaching and complex regulations, coupled with its acquiescence to confidentiality, obfuscates a life science company's obligations under SEC regulation; as a result, life science companies are an attractive target for securities litigation. This Note explores the interplay between FDA and SEC regulations to pinpoint the source of the disproportionately high rate of securities litigation. It identifies two possible causes, one calling for drastic reforms and the other requiring a modest solution in comparison. It subsequently recommends the FDA release broad guidance on good disclosure practices in an attempt to reduce litigation for life science companies before more radical reforms are required. [ABSTRACT FROM AUTHOR]

The article discusses the topics of loss causation and materialization of risk doctrine in securities fraud class action lawsuits in the U.S. Also cited are the ruling by most federal circuit courts on loss causation, the securities lawsuit against BP after its Deepwater Horizon explosion and oil spill, and the Securities & Exchange Commission (SEC) Rule 10b-5 on securities fraud.

Using a sample of 388 securities fraud lawsuits filed between 2002 and 2017 against foreign issuers, we examine the effect of the Supreme Court’s decision in Morrison v. National Australia Bank Ltd. We find that the description of Morrison as a steamroller, substantially ending litigation against foreign issuers, is a myth. Instead, we find that Morrison did not significantly change the type of litigation brought against foreign issuers, which, both before and after this case, focused on foreign issuers with a U.S. listing and substantial U.S. trading volume. Although dismissal rates rose post-Morrison, we find no evidence that this was related to the decision. Settlement amounts and attorneys’ fees remained unchanged post-Morrison. We use these findings to theorize that Morrison was primarily a preemptive decision about standing that firmly delineated the exposure of foreign issuers to U.S. liability in response to the Vivendi case, which sought to expand the scope of liability for foreign issuers whose shares traded primarily in non-U.S. venues. When Morrison is placed in its true context, it is justified as a decision in line with administrative and court actions that have historically aligned firms’ U.S. liability to be proportional to their U.S. presence. Although Morrison had this defining effect, it did not change the litigation environment for foreign issuers, which was the oft-cited import of the decision. More generally, our analysis of Morrison underscores how the decision has been mistakenly characterized as a case primarily about extraterritoriality rather than standing [ABSTRACT FROM AUTHOR]

The article discusses the U.S. Court of Appeals for the Second Circuit's ruling in the 2018 case United States v. Martoma which deals with American criminal law and insider trading, and it mentions how the court redefined an insider trading-related personal benefit requirement. According to the article, hedge fund portfolio manager Mathew Martoma used inside information to facilitate short sales of stocks and was charged with securities fraud and conspiracy to commit securities fraud.

We examine the impact of disclosure by defendant firms on the outcome of securities fraud class actions. We hypothesize that firms issuing a higher quantity of disclosure will experience more adverse litigation outcomes, given the strict pleading standards of the Private Securities Litigation Reform Act (PSLRA). Using broad measures of disclosure derived from press releases issued during the class period, we find that more disclosure increases the likelihood that the judge will allow a lawsuit to proceed rather than dismissing it. Our results provide new insights to the literature on disclosure and litigation by studying the outcome rather than incidence of litigation, or the plaintiffs' decision to sue. We strengthen the inference that the features of the PSLRA create a positive relationship between overall disclosure and the likelihood of settlement by showing that the relationship holds when controlling for forward-looking disclosure and ex ante litigation risk, and by providing evidence that more public disclosures allow plaintiffs to present more extensive cases. [ABSTRACT FROM AUTHOR]

The article discusses America's Congress in relation to an increase in securities-fraud (SF) class action lawsuits in the wake of the U.S. Supreme Court's (Court's) ruling in the 1988 SF case Basic Inc. v. Levinson. According to the article, class action litigation is ineffective at deterring SF and compensating victims. The SF case Halliburton Co. v. Erica P. John Fund, Inc. is assessed, along with a price-maintenance theory and the Court's effort to limit SF class actions.

This Article analyzes a recent Supreme Court case, Lorenzo v. Securities and Exchange Commission, and explains why it provides a valuable window into the Court's future now that Justice Kennedy has retired and his seat filled by Justice Brett Kavanaugh. Lorenzo is an important case that raises fundamental interpretative questions about the reach of federal securities statutes. But most significant is its unique procedural posture: when the Supreme Court issues its decision on Lorenzo in 2019, Justice Kavanaugh will be recused while the other eight Justices rule on a lower court opinion from the D.C. Circuit in which he wrote separately in an extensive dissent. That dissent is quite remarkable. It contains a scathing assessment of securities fraud enforcement and adjudication at the SEC, the majority opinion’s interpretation of deceptive financial conduct under Rule 10b-5, and the SEC’s overall role in the development of federal securities law doctrine. Judge Kavanaugh’s dissent also goes on to identify how the legal deficiencies specific to Lorenzo motivate his broader skepticism towards the constitutional legitimacy of the administrative and regulatory state as a whole; a view that represents his signature contribution as a federal judge. Thus, in Lorenzo, the defining judicial philosophy of the newest Supreme Court Justice is on full display. More broadly, this Article demonstrates that the deeper import of Lorenzo is not what it reveals about the views of Justice Kavanaugh. Rather, it is in the reception those views will meet from the other eight Justices on the Court. In addressing the argument set forth in the Lorenzo dissent, the current members of the Court will be confronting the positions of their newest peer and colleague. By necessity, they will also signal their openness to being persuaded by Justice Kavanaugh on the issues where he speaks with greatest authority and can be expected to act as forceful advocate for his vision of the law at the Court. Lorenzo can therefore be seen as a bellwether for Justice Kavanaugh’s influence as judicial entrepreneur on behalf of his trademark theory of the Constitutional separation of powers in administrative law. Most importantly, the case bears directly on the area of administrative law where the stakes are highest of all—the role that Justice Kavanaugh may play in the demise of the Chevron doctrine and the collapse of judicial deference toward the administrative state. [ABSTRACT FROM AUTHOR]

This Article concerns the recent Supreme Court case, Leidos, Inc. v. Indiana Public Retirement System (Leidos), and examines the broader issues that it raised for securities law. The consensus among scholars and practitioners is that Leidos presented a direct conflict among the circuit courts over a core question of securities law--when a failure to comply with the SEC's disclosure requirements can constitute fraud under Rule 10b-5. This Article provides a much different interpretation of the case. It begins by demonstrating that the circuit split which is presumed to have brought Leidos to the Supreme Court does not in fact exist. It then shows that, rather than being riddled with disagreement, the leading judicial analysis in this area of the law instead reflects a shared set of misconceptions about how the securities regulation architecture works. By unraveling the underlying sources of the Leidos mix-up, this Article makes three contributions. First, it identifies overlooked aspects of the disclosure rules at issue in Leidos, and provides a novel analysis of how the case should have been decided. Second, it explains how errors in leading interpretations of the legal authorities implicated in Leidos carry over to other prominent portions of the regulatory framework, namely Sections 11 and 12 of the 1933 Securities Act. Third, it demonstrates that a central yet ill-defined securities doctrine--the duty to disclose--functions primarily to obscure rather than clarify the legal questions at issue in disclosure fraud claims. Taken together, these points suggest that Leidos was a more unusual case than has been appreciated, and stands at a remarkable confluence of legal and scholarly confusions, many of which implicate fundamental principles of securities law. [ABSTRACT FROM AUTHOR]

The article explores the constitutionality of the Complete Bar Order in securities fraud class action lawsuits in the U.S. It offers an overview of the history of the usage of bar orders in receivership proceedings in securities fraud litigation. The legal and scholarly justifications for the Complete Bar Order under the Due Process clauses of the Fifth and Fourteenth Amendments are discussed.

"If crimes are committed, they are committed by people; they are not committed by some free-floating entity. These companies and other entities don't operate on automatic pilot. There are individuals that make decisions - and some make the right decisions, and some make the wrong decisions. " Jed S. Rakoff, United States District Judge1 [ABSTRACT FROM AUTHOR]

Corporate governance literature usually refers to enforcement superiority to explain the premium that foreign firms enjoy when cross-listing in U.S. stock exchanges. This Article casts doubt on this hypothesis by analyzing two comparative case studies of private and public enforcement actions taken against securities fraud in the United States and in an emerging market during the 2008 financial crisis. [ABSTRACT FROM AUTHOR]

The article focuses on the decision of the U.S. court cases related to federal practice. Topics discussed include City of Plantation Police Officers Pension Fund v. Meredith Corp. on district court's dismissal of a securities fraud action and its denial of a motion; Sadare v. Bosch Automotive Servs. Sols. Inc. on attorney-client privilege and Hmong College Prep. Academy v. Woodstock Capital, LLC on citizenship of each of the members of a limited liability corporation.

In its most recent Halliburton II decision, the Supreme Court rejected an effort to overrule its prior decision in Basic Inc. v. Levinson. The Court reasoned that adherence to Basic was warranted by principles of stare decisis that operate with "special force" in the context of statutory interpretation. This Article offers an alternative justification for adhering to Basic--the collaboration between the Court and Congress that has led to the development of the private class action for federal securities fraud. The Article characterizes this collaboration as a lawmaking partnership and argues that such a partnership offers distinctive lawmaking advantages. Halliburton II offered a compelling illustration of the lawmaking partnership, as Congress and the Court together used the Basic decision as a building block to enable and then refine private securities fraud class actions. Notably, Congress took affirmative steps through legislation--the Private Securities Litigation Reform Act and the Securities Litigation Uniform Standards Act--to balance the competing policy objectives of allowing effective enforcement while limiting the potential for abusive litigation. The process illustrates the three critical components of a lawmaking partnership: an open-textured statute, sequential adjustments to the statutory scheme by both the Court and Congress, and a set of common objectives to guide the lawmaking enterprise. This Article argues that the existence of a lawmaking partnership offers the Court the freedom to engage in explicit policy analysis of a type that is inconsistent with a traditional textualist approach. Put differently, the partnership operates as a type of rule of construction allowing the Court to engage in its own analysis of the interpretation that will best further congressional objectives. The lawmaking partnership also offers distinctive lawmaking advantages, including efficiency, political insulation, and comparative institutional competence. An exploration of these advantages can be used to identify the potential value of the lawmaking partnership beyond federal securities fraud. [ABSTRACT FROM AUTHOR]

This Article examines the intersection of fee-shifting bylaws and federal private securities fraud suits. Specifically, this Article hypothesizes about the effects fee-shifting bylaws would have, if enforceable, on private securities fraud litigation. It then turns to the validity of fee-shifting bylaws under federal law and concludes that they are invalid as applied to securities fraud claims. In light of this conclusion, this Article considers whether Congress should pass legislation to validate fee-shifting bylaws and determines that it should not. [ABSTRACT FROM AUTHOR]

In ATP Tour, Inc. v. Deutscher Tennis Bund, the Delaware Supreme Court held that a private company's fee-shifting bylaw was facially valid. And before that decision, Delaware courts similarly upheld companies' use of forum-selection bylaws requiring that intra-corporate disputes be litigated in a single designated forum. Many interpreted these holdings as broad endorsements of bylaws that could regulate the litigation process itself and a move by the Delaware courts to curtail shareholder litigation. Indeed, the Delaware legislature itself responded to ATP, amending the state's corporate law to explicitly prohibit Delaware companies from adopting fee-shifting bylaws for shareholder litigation. But the legislature simultaneously allowed Delaware companies to adopt forum-selection bylaws. In this Article, we show that ATP and caselaw related to forum-selection bylaws will not result in calamity for investors or provide a silver bullet for companies to end shareholder and securities litigation. Rather, when carefully and fairly read, these decisions simply reaffirm the Delaware Way, under which corporate managers are vested with broad legal authority, but that authority is tempered by principles of equity. Using ATP and fee-shifting bylaws as a point of departure, we provide a template for equitable analysis of not only fee-shifting bylaws, but also forum-selection bylaws and other bylaws relating to litigation. Furthermore, as we argue in this Article, had equitable principles been properly applied to fee-shifting bylaws, equitable principles would have likely prevented fee-shifting bylaws from extinguishing meritorious shareholder or securities litigation anyway. In fact, the only kind of fee shifting bylaw that would likely have survived equitable scrutiny is one that already exists under Delaware's Rule 11--one that provides that a neutral arbiter can approve of two-way shifting of reasonable fees in response to frivolous litigation. Ultimately, perhaps the most compelling case for legislation barring fee-shifting bylaws in other states that follow the Delaware Way is that doing so may spare litigants and the system the lengthy, common-law process that will likely arrive at the state of the law already in place. [ABSTRACT FROM AUTHOR]

The article focuses on issues surrounding confidentiality agreements as well as the misappropriation theory of insider trading. Topics discussed include theories under which an individual can be held liable for insider trading under Rule 10b-5 U.S Securities Exchange Act, the U.S Supreme Court's decision in case United States v. O 'Hagan that addressed the applicability of the misappropriation doctrine, and common law fraud claims.

Through two recent decisions, the Supreme Court has both reaffirmed and revised the so-called fraud-on-the-market presumption of reliance--the mechanism that allows securities-fraud class actions to go forward. Members of the Court split on the mechanics of the presumption in the first of these cases (Amgen), leading to a call to reconsider the entire presumption as outmoded and mistaken. The second case (Halliburton) said that the presumption was still good law, though it did potentially increase the difficulty of getting the class certified. This Article compares and contrasts the two cases, explores the role of market efficiency post-Halliburton, and digs into what it means for the issue of price distortion to be an appropriate subject for consideration at the class certification stage. [ABSTRACT FROM AUTHOR]

In this Article, I imagine a post-class-action landscape for shareholder litigation. Projecting an environment in which both securities-fraud and transactional class actions are hobbled by procedural or substantive reforms--most likely through the adoption of mandatory-arbitration provisions or fee-shifting provisions--I assess what shareholder litigation would disappear, what (if any) would remain, and what a post-class-action landscape would look like. I argue that loss of the class action would remove a layer of legal insulation that prevents institutional investors from having to pursue positive-value claims against companies. Currently, the class action effectively ratifies fund fiduciary passivity in the face of fraud, for example, as long as the institution files a claim form to collect its share of a class action settlement that has been judicially certified. But without the class action, monitoring and litigation costs for such institutions may increase because fund fiduciaries must monitor their portfolios for, and litigate, positive-value claims. Failure to do so could expose them to liability to fund beneficiaries. I offer some suggestive, but incomplete, evidence about how many funds will have positive-value claims. Whether institutions in fact pursue such claims will decisively determine whether shareholder litigation has a post-class-action future. I also argue that bizarre gaps in liability coverage for public-pension-fund fiduciaries--who serve the funds that have traditionally been the most active litigants--may have unpredictable effects on trustee behavior outside the class action, may tilt in favor of bringing claims, and may also lead to herding behavior in arbitration. I also assess how loss of the class action would affect plaintiff law firms. I argue that the end of the class action means, at a minimum, abandonment of the idea that investors should be compensated for losses due to fraud or other corporate malfeasance. And I demonstrate that loss of the class action leaves investors in smaller firms with no legal remedy for wrongdoing, even if some form of litigation survives. Finally, I argue that shareholder litigation without class actions--should institutional investors choose to pursue it--would create a new distortion in the private enforcement regime, what I call the "semi-circularity problem." Without class actions, negative-value claimants would no longer be able to recover for their damages in shareholder litigation. But they would still be forced to subsidize the losses of positive-value claimants to the extent that the smaller investors own shares in defendant companies that must pay damages claims to large institutional investor plaintiffs. Loss of the class action device creates a two-tier legal system for investors: one in which large institutions may recover while individuals and smaller institutions do not from the same fraud (or mispriced deal), and one in which smaller investors that still own defendant companies must reach farther into their pockets to compensate large institutional investor losses for that fraud (or mispriced deal). [ABSTRACT FROM AUTHOR]

This Article examines the use of confidential witnesses ("CWs") in investigating and substantiating securities fraud claims. The Private Securities Litigation Reform Act has placed a heavy burden on plaintiffs at the pleading stage, which has caused plaintiffs to perform preliminary investigations and seek confidential information as a basis for their allegations in the complaint. Testimony of CWs is often the centerpiece of the evidence substantiating plaintiffs' securities fraud claims. As a result, the investigation conducted prior to filing an amended complaint has become a central issue in the realm of securities litigation, subject to attack by the defendants. This Article discusses the legal and ethical considerations for contacting former employees of the defendants who may become "confidential informants" that provide invaluable information for substantiating securities fraud claims. The Article further discusses defendants' tactics in attacking the method of plaintiffs and their counsel's investigation, subjecting both lead plaintiff and lead counsel to motions for sanctions for alleged Rule 11 violations pertaining to the parties' representations in court. The Article provides advice on defending these motions and conducting thorough investigations prior to filing an amended complaint. [ABSTRACT FROM AUTHOR]

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 classcertification 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 "eyeball" reliance claims even without demonstrating price impact suggests that the Court has doubts that such claims are viable. If so, the Court misinterpreted the fraud on the market theory and the distinction between claims based on individual evaluation of corporate-specific information and claims based on reliance on the market price. The Court's holding could therefore unfairly impact future claims based on individual reliance. Moreover, the Court's willingness to front-load disputes into the class-certification stage- without offering a clear justification for doing so-demonstrates that Halliburton was ultimately an exercise in line drawing, representing a compromise position likely motivated by a desire to protect defendants from litigation risks. [ABSTRACT FROM AUTHOR]

The article explores on the securities class actions in the U.S. Supreme Court case Halliburton Co. v. Erica P. John Fund Inc. It examines the cost and distraction of the securities class actions to the shareholders and operations of both companies. It also cites the threat of securities fraud class actions to the shareholders of the public companies in the U.S.

The article discusses the U.S. Supreme Court case Halliburton Co. v. Erica P. John Fund Inc. which deals with fraud in securities class action practice. The court reviewed the fraud-on-the-market presumption of reliance under the common law of fraud. The court examined the promoter's misstatements in presenting the material facts of the company.

The article focuses on the issues related to legal malpractice law with the scope of the attorney-client privilege and attempted transfers of legal malpractice claims. The U.S. Supreme Court cases discussed include Halliburton Co. v. Erica P. John Fund, Inc. regarding the securities fraud, Fifth Third Bancorp v. Dudenhoeffer related to the investment in Employee Stock Ownership Plan (ESOP) and Lawson v. FMR LLC regarding the liability of private firms under the provisions of Sarbanes-Oxley.

The article focuses on the business litigation cases decided from October 1, 2013, through September 30, 2014, in the U.S. The case discussed include the U.S. Eleventh Circuit Court case Corcel Corp., Inc. v. Ferguson Enterprises, Inc. related to the Racketeer Influenced and Corrupt Organizations Act claims, U.S. Supreme Court (SC) case Halliburton Co. v. Erica P. John Fund, Inc. related to securities fraud class actions and SC case Northwest, Inc. v. Ginsberg related to breach of contract.

The article focuses on laws applicable in private antifraud claims addressed in cross-border security-based swaps (SBS), credit default swaps that aggravated the 2008 financial crisis and swap agreements such as International Swap Dealers Association Master Agreement.

The article examines the decision of the U.S. Supreme Court in the Halliburton Co. v. Erica P. John Fund, Inc. case concerning the securities fraud. It states the internal inconsistencies between Halliburton Co. v. Erica P. John Fund, Inc. and Amgen Inc. v. Connecticut Retirement Plans and Trust Funds. It mentions the provision of the Private Securities Litigation Reform Act of 199532 (PSLRA).

The article offers information on class actions for securities fraud testing for causation in Australia in context to the judicial decision of the U.S. Supreme Court in the case of Halliburton Co. v. Erica P. John Fund Inc. It informs that the Court held that plaintiffs in securities fraud actions does not need prove loss causation in order to obtain class certification. It discusses the fraud of the market theory with reference to decision in P. Dawson Nominees Pty Ltd. v. Multiplex Ltd.

The article focuses on failure of whistleblower provision of the U.S. Dodd-Frank Wall Street and Consumer Protection Act in providing protection to overseas whistleblowers. It discusses the extraterritorial application of the Dodd Frank Act in helping the Securities and Exchange Commission (SEC) in investigating the securities fraud cases against foreign corporations. It further discusses the judicial opinion of the U.S. Supreme Court on case Morrison v. National Australia Bank.

The article focuses on the importance of tolling agreements and equitable tolling in managing the limitation periods in securities law. Topics discussed include importance of equitable tolling in managing statutes of limitations and the statutes of repose, need of proper time for filing securities fraud cases and to investigate securities-fraud scheme, and the claims of class action for securities lawsuit under the U.S. Private Securities Litigation Reform Act (PSLRA).

The article discusses the U.S. Supreme Court Case Tellab v. Makor which deals with whether public accounting firms are subject to conduct standards in securities fraud claims. A background of the case is provided which involves a section of the Sarbanes-Oxley Act on certification by a public accounting firm. Also explored are the Public Company Accounting Reform and Investor Protection Act of 2002, Ponzi scheme lawsuits, and the liability of the external auditor.

Concerned by the overwhelming presence of vexatious federal securities-fraud class actions, Congress passed the Private Securities Litigation Reform Act of 1995 to increase the procedural burden plaintiffs would face in filing these nonmeritorious suits. Instead of being deterred, plaintiffs simply brought their suits in state court. Congress responded with the Securities Litigation Uniform Standards Act of 1998 (SLUSA), making federal court the exclusive venue for securities-fraud class actions. However, Congress expressly saved from SLUSA's reach claims that were traditionally brought in state court under corporate law through the Delaware carve-out. Though this exemption was meant to protect the historic dual federal-state securities-regulation regime, recent appellate court opinions have stretched SLUSA's reach too far, leaving plaintiffs incapable of bringing many traditional state-law claims essential to the proper policing of corporate law regardless of the forum. This Note addresses the implications of such a broad reading of SLUSA and advocates a two-pronged approach that will simultaneously effectuate SLUSA's purpose while still preserving these important state-law claims. By looking to the heart of a complaint, courts can best effectuate congressional intent both to limit problematic litigation practices and to preserve the important role federalism plays in the securities-law context. [ABSTRACT FROM AUTHOR]