How To Calculate Securities Fraud Class Size With SEC Data

Law360 (September 11, 2020, 2:00 PM EDT) -- Many U.S. Securities and Exchange Commission Rule 10b-5 actions relate to investor lawsuits whereby certain shareholders claim they paid an inflated price for a security due to fraud by the issuing company. There is belief that Rule 10b-5 actions may surge from COVID-19 related disclosures. 

In class action matters, estimating the shares that were net purchased at the inflated price is challenging. Two commonly applied methods for calculating the shares in the class for Rule 10b-5 claims are the single-trader and multitrader models, which have been criticized by various courts and academic theorists. 

This article provides a methodology for (1) calculating...

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