In Re Williams Securities Litigation - WCG Subclass: Publicly Traded Corporations Win Leniency in Their Representations after the Tenth Circuit Redefines Loss Causation in Private Actions for Securities Fraud
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Authors
Christensen, Jeremy T.
Issue Date
2010
Type
Journal Article
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Abstract
INTRODUCTION|In 1933 and 1934, the United States Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934, which Congress designed to reign in the securities markets and industry. In consideration of Congress's criminalization of securities fraud, the Supreme Court of the United States long recognized an implied private right of action for securities fraud. Among the elements that a plaintiff investor ("investor") must prove to establish a successful private action for securities fraud is the element of loss causation. Federal courts borrowed the common law test of proximate cause often used in tort cases as the appropriate test to establish loss causation in a securities fraud case. Federal courts further established that, in the spirit of the common law rule of proximate cause, an investor may recover for those losses that can be attributed to fraudulent conduct and that an investor need not prove that the entirety of the investor's losses resulted from the fraudulent conduct. In the only Supreme Court case to address the issue of loss causation, the Court in Dura Pharmaceuticals,Inc. v. Broudo affirmed the common law roots of the loss causation requirement and stated that although an inflated purchase price itself did not constitute proximate cause, an investor...
Description
Citation
43 Creighton L. Rev. 563 (2009-2010)
Publisher
Creighton University School of Law