Securities Class Actions Appear to Be Largely ‘Price-Maintenance’ and Omissions Cases

10 April 2017
By Dr. David Tabak

The US Supreme Court was recently on the verge of being asked, and may still be asked, to resolve a circuit split on whether a “price-maintenance” theory of inflation is allowable in securities-fraud cases. As discussed in a new paper authored by NERA Managing Director Dr. David Tabak, “Securities Class Actions Appear to Be Largely ‘Price-Maintenance’ and Omissions Cases,” less than 30% of securities class actions filed between 2012 and 2016 show a statistically significant price increase on the first day of the proposed class period. This suggests that the remaining cases would likely be classified as price-maintenance or omissions cases. Considering the Second Circuit’s Vivendi decision, which stated that “a ‘pure omission’ theory is relatively uncommon in securities litigation[,]” this may mean that, should the Supreme Court take up this issue, a ruling might affect the viability of many, if not most, securities class actions.