Home > Legal Library > Abstract




Join Matindale-Hubbell Connected


Halliburton Co. v. Erica P. John Fund, Inc.: Assessing Possible Modifications to Basic And The Fraud-On-The-Market Theory



by Ryan J. Andreoli
Cadwalader, Wickersham & Taft LLP - New York Office

William J. Foley
Cadwalader, Wickersham & Taft LLP - New York Office

Jason M. Halper
Cadwalader, Wickersham & Taft LLP - New York Office

March 19, 2014

Previously published on March 7, 2014

Securities class action lawsuits have long been a fact of life for public companies traded on a U.S. exchange. Since 1997, plaintiffs have filed more than 3,200 securities fraud lawsuits that have resulted in approximately $75 billion in settlements. The threat posed by such suits has been cited as a major deterrent to listing on a U.S. stock market; indeed, the number of U.S. exchange-listed companies has declined by 46% since 1998. The prevalence of securities litigation under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) has been fueled in large part by the Supreme Court’s adoption in Basic Inc. v. Levinson, 485 U.S. 224 (1988), of the fraud-on-the-market presumption of reliance. However, the Supreme Court’s much anticipated decision in Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 636 (2013) (“Halliburton”) (expected later this Spring) could fundamentally alter the securities litigation landscape depending on whether it reaffirms, reverses or modifies Basic. If the Court opts for a middle course—neither outright reversing nor affirming Basic (an outcome that appears quite possible based on the Justices’ questioning at the March 5 oral argument)—litigants may face a period of substantial uncertainty in the absence of a developed body of caselaw interpreting a new rule and in the face of novel theories and tactics from securities plaintiffs. This article explores these possibilities.


 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

View More Library Documents By...

 
Author
 
Ryan J. Andreoli
William J. Foley
Jason M. Halper
 
Cadwalader, Wickersham & Taft LLP Overview