Supreme Court Could Decimate Securities Class Actions

A case that challenges the accepted definition of “reliance” in securities class actions is under review. In Erica P. John Fund v. Halliburton the Court will consider whether plaintiff lawyers can continue to make the case that shareholders were relying on fraudulent statements when they bought a stock, on the legal theory that the share price reflected those statements, or whether instead the plaintiff lawyers would need to demonstrate that individual shareholders read and relied on the statements. If it’s the latter, according to law professor Steven M. Davidoff, the decision “could just end shareholders’ ability to sue companies for securities fraud.”