Rule 10b-5 securities class actions filed after an adverse company event are on the rise. Plaintiffs often use an “inflation-maintenance” or a “price-maintenance” theory, claiming companies misrepresented information to prevent share prices from falling, as seen in San Diego County Employees Retirement Assoc. v. Johnson & Johnson.

To get a securities fraud class certified, plaintiffs must show that “reliance” on the alleged misrepresentations can be proved on a class-wide basis. Basic Inc. v. Levinson, 485 U.S. 224 (1988) created a rebuttable presumption of class-wide reliance if plaintiffs bought their shares in an “efficient” market at market price after the alleged misstatements were publicly made but before the truth was revealed. If defendants can show the alleged misrepresentations had no price impact on the stock, the Basic presumption of class-wide reliance is rebutted, and the class will not be certified.

What evidence defendants need, whether they must show zero price impact, and what evidence courts may consider in deciding price impact at the certification stage, particularly in inflation-maintenance cases, are crucial, complex, and developing issues. On 20 November, Senior Managing Director David Tabak will speak in the webinar “Securities Class Certification Under Inflation-Maintenance Theory: Rebutting Price Impact” with Paul, Weiss, Rifkind, Wharton & Garrison LLP Partner Alison Benedon to explore price-impact rebuttal at the certification stage of the fraud on the market presumption in inflation-maintenance theory class actions in light of San Diego County Employees Retirement Assoc. v. Johnson & Johnson.

Use code Tabak 7LtNsIAKACV2 for 50% off the regular program price.