• "Statistical Tracing" under Section 11 of the Securities Act Rejected in Federal Appeal
  • March 25, 2005 | Authors: Noel M.B. Hensley; Nicholas Even
  • Law Firm: Haynes and Boone, LLP - Dallas Office
  • In the late 1990's, after the U.S. Supreme Court limited the scope of Section 12 of the Securities Act in Gustafson v. Alloyd Company, and after the Private Securities Litigation Reform Act heightened pleading requirements under Section 10(b) of the Securities Exchange Act, securities litigators noted a marked increase in claims brought as putative class actions under Section 11 of the Securities Act, which imposes liability for even innocent material misstatements in public offering registration statements. Fueled by the IPO boom and subsequent market disappointments, this trend seemed only to increase after 2000.