Halliburton Decision Could Change The Game, But Won’t End It

The fraud-on-the-market doctrine could be invalidated by a decision in Halliburton v Erica P. John Fund, now before the U.S. Supreme Court. That doctrine presupposes that the market absorbs all stated “material facts,” which are then reflected in the market price, and it is what currently enables most of the securities lawsuits that are brought on a class basis. Attorneys Mitchell A. Lowenthal and Lewis J. Liman from Cleary Gottlieb Steen & Hamilton look at what would fill the void if the fraud-on-the-market theory is thrown out and why, even if that happens, companies probably should not reduce their D&O insurance coverage.