Securities Litigation Should Not Be Based On Junk Science

Law360 (July 23, 2019, 3:33 PM EDT) -- The fraud-on-the-market presumption has made federal securities litigation a hotbed of junk science about capital market efficiency. This state of affairs traces back to the work of a single district court in the 1989 decision Cammer v. Bloom,[1] a case that continues to be influential in securities cases 30 years later. Just two weeks ago, for example, the court in Signet Jewelers Limited Securities Litigation applied the Cammer factors on its own initiative in a case where no party challenged market efficiency.[2]

When the United States Supreme Court endorsed the fraud-on-the-market presumption in its 1988 decision, Basic v. Levinson,[3] it left district...

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