Securities class action litigation goes before U.S. Supreme Court

Wednesday, the U.S. Supreme Court heard arguments in Halliburton v. Erica P. John Fund, a case in which core principles underlying securities litigation – “reliance” and “fraud-on-the-market” – are under review. These principles were established by the Court in the 1988 decision in Basic v. Levinson, and have been under scrutiny ever since. If Basic is overturned, litigation experts estimate that anywhere from 20-40% of securities class action cases might no longer be valid.

Supreme CourtHowever, during oral arguments, the Justices, including the most conservative members, seemed to show little inclination to completely abandon the 26-year-old decision. Instead, questions seemed to look for compromise, which might raise the hurdle for plaintiffs seeking class certification but not eliminate it altogether in instances of fraud. A decision on the case is expected by June.

Click the following links for news coverage of Wednesday’s hearing: Wall Street Journal; New York Times; USA Today; Forbes.

To request a whitepaper analyzing Halliburton, the issues and the potential impact it may have on securities litigation in the future, click here.

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