Indirect Deception: Eroding Fraud-On-Market Theory

Law360, New York (April 12, 2010, 1:39 PM EDT) -- Another court has adopted the “indirect deception” theory, whereby a defendant may be liable to a plaintiff through statements made or omissions in communications to third parties. This theory has become increasingly accepted by courts when analyzing causation in consumer fraud actions.

While many state consumer fraud acts have done away with the privity requirement, and to some extent a reliance requirement, until recently, courts rejected the concept of indirect deception as an invalid evasion of the fraud-on-the-market theory, which is generally not recognized outside of...
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