Law360, New York (December 18, 2015, 11:53 AM EST) -- As we look back on the most significant decisions impacting securities law in 2015, Loreley Financing (Jersey) No. 3 v. Wells Fargo Securities LLC[1] is of particular import. In Loreley, the Second Circuit provided a detailed analysis of loss causation — the requirement that a plaintiff prove that an alleged fraud caused economic loss. Although ostensibly a common law fraud case, Loreley has significant implications for federal securities law cases because it explains what a securities fraud plaintiff must show when its loss coincides with a broad financial decline. However, the decision fails to clarify a plaintiff's burden when pleading loss causation. Though it did not decide the issue, the court's analysis of the plaintiff's "slim pleadings" in Loreley implies that, in pleading loss causation, securities fraud plaintiffs need only allege facts providing "some indication" of a "potential causal link" between the fraud and the alleged loss.[2] This implied standard for pleading loss causation should not be embraced in light of several decisions of the U.S. Supreme Court about pleading standards and class action litigation. Based on those decisions, plaintiffs' pleadings of loss causation should be subjected to a more exacting standard in securities class action litigation despite the Second Circuit's analysis in Loreley....