Accounting for Bad News: Securities Fraud Litigation and the Equal Application of Market Efficiency
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Authors
Ilg, Michael
Issue Date
2010
Volume
43
Issue
Type
Journal Article
Language
Keywords
Alternative Title
Abstract
FIRST PARAGRAPH(S)|The Fraud-on-the-Market theory holds that high volume markets, such as the New York Stock Exchange, effectively incorporate all available information of present and expected value into a security's price. As endorsed by the Supreme Court of the United States, fraud on the market serves an important procedural role within the context of securities litigation by providing a general reliance presumption for all investors. An investor, or class of investors, is able to sue upon a claim of management misrepresentation without having to show actual reliance on the fraudulent information. When a market is assumed to be efficient, misinformation is deemed to defraud investors who have relied upon the integrity of the market itself The presumption of market efficiency may thus be seen as an aspirational device, for placing the costs of rebuttal upon a corporation is said to encourage market transparency and the very same integrity of information that is assumed theoretically...
Description
Citation
43 Creighton L. Rev. 471 (2009-2010)
Publisher
Creighton University School of Law