Schleicher V. Wendt And Fraud-On-The-Market Doctrine

Law360, New York (October 25, 2010, 4:35 PM EDT) -- The fraud-on-the-market presumption of reliance has proven to be a powerful tool for plaintiffs seeking to obtain class certification, and the attendant settlement leverage, in Section 10(b) securities fraud cases.

Recognizing that class certification has important practical consequences, the Fifth Circuit has held plaintiffs to a rigorous standard, holding that the presumption does not apply if the plaintiff cannot demonstrate loss causation at the class certification stage. The Second Circuit has adopted similar reasoning, allowing defendants an opportunity to rebut the fraud-on-the-market presumption at the class...
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