What Do Market Overreactions Mean For Securities Litigation?

Law360 (October 18, 2019, 6:16 PM EDT) -- In September, a total of 44 class action lawsuits were filed alleging securities fraud. This is the highest monthly total over the past 12 months.[1]

Of the 44 filings last month, 20 were alleged violations of U.S. Securities and Exchange Commission Rule 10b-5.[2] According to Rule 10b-5, it is unlawful to make false or misleading statements of, or omit to state a material fact related to the purchase or sale of securities.

In a typical 10b-5 lawsuit, the magnitude of the price drop in response to the corrective disclosure, which corrects the misleading statements or omissions, is the key datum used...

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