In the months since the U.S. Supreme Court’s June 2014 decision in Halliburton v. Eric P. John Funds,1 class action defendants have had no luck when attempting to take advantage of the decision’s principal holding. In Halliburton, one of the most eagerly (or anxiously) awaited securities decisions in recent memory, the court was asked to overrule Basic v. Levinson,2 a bedrock of securities law for more than 25 years. Basic held that investors in securities fraud actions may establish the element of reliance based on the presumption that stock prices reflect all public, material information, including alleged misrepresentations. Although the court declined to overrule Basic, it held that defendants in securities class actions should be permitted to rebut the Basic presumption at the class certification stage, rather than wait until summary judgment or trial.
The three district courts to consider defendants’ attempts to rebut the Basic presumption after Halliburton have all rejected defendants’ arguments, suggesting that defendants are still figuring out how best to utilize the decision.
Section 10(b), ‘Basic’, and ‘Halliburton’
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