Rejecting The 'Fraud Created The Market' Theory

Law360, New York (August 26, 2010, 6:45 PM EDT) -- In affirming the denial of a securities fraud class certification, the U.S. Court of Appeals for the Third Circuit flatly rejected the "fraud created the market" theory as a basis for establishing a presumption of reliance to satisfy the requirements of a Section 10(b) claim and thus the predominance requirement of Rule 23(b)(3). Malack v. BDO Seidman, LLP, 2010 WL 3211088 (3rd Cir. Aug. 16, 2010).

In so ruling, the Third Circuit joined the Seventh Circuit, Eckstein v. Balcor Film Investors, 8 F.3d 1121 (7th Cir....
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