Case Study: Acticon V. China North East Petroleum

Law360, New York (September 4, 2012, 10:13 AM EDT) -- The United States Court of Appeals for the Second Circuit recently held that even if a stock recovers its value after dropping following a corrective disclosure, a showing of loss causation is not necessarily negated at the pleading stage in a claim for securities fraud, in Acticon AG, et al. v. China North East Petroleum Holdings Ltd., et al., No. 11-4544-cv (2nd Cir., August 1, 2012).

In Acticon, the plaintiffs filed a class action complaint for securities fraud against China North East Petroleum. Plaintiffs alleged that NEP inflated its oil reserves, engaged in improper accounting practices, and that its former CEO...

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