Securities Law: Fraud-on-the-Market Theory Demystified

webcast
23 July 2013
Hosted By: The Knowledge Congress

On 23 July 2013, NERA Senior Vice President Dr. David Tabak joined a panel of experts for a two-hour Knowledge Congress webcast that offered an in-depth analysis of the fraud-on-the-market doctrine (FOTM), which is virtually essential to class action plaintiffs in securities fraud cases. FOTM is based on the theory that, when a security is traded in an efficient market, all public information is reflected in the market price of the security, providing a rebuttable assumption that an investor who buys or sells at the market price has effectively relied upon all public statements. If a defendant can defeat FOTM's rebuttable presumption, it will typically defeat class certification and may effectively prevail on the case. The Supreme Court recently suggested it would be open to revisiting the wisdom behind FOTM. Understanding FOTM and developments in economic theory will be critical for both shareholders and companies in future securities fraud cases.

During the webcast, the panel discussed relevant economic theories and court decisions and offered substantive information regarding their implications on the presumption of reliance in securities fraud cases, as well as class certification proceedings and materiality. In addition, the panel provided practical guidance to effectively use FOTM or counter its application in a securities fraud case.

Learn more via The Knowledge Congress website.

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