On Sept. 27, the U.S. Court of Appeals for the Second Circuit affirmed the Southern District of New York’s post-trial rulings in the long-pending securities class action, In re Vivendi Universal, S.A. Securities Litigation, 838 F.3d 223, 2016 U.S. App. LEXIS 17566 (2d Cir. 2016). After a three-month trial, a jury entered a verdict against Vivendi, finding that, during the Oct. 30, 2000-Aug. 14, 2002, class period, the company made 57 material misstatements that artificially inflated its stock price in violation of Section 10(b) of the Securities Exchange Act of 1934 and the U.S. Securities and Exchange Commission Rule 10b-5. The district court denied Vivendi’s motions for judgment as a matter of law and for a new trial with respect to all but one of the alleged misrepresentations.
On appeal, Vivendi challenged the district court’s rulings on several grounds, all of which the Second Circuit rejected. In its opinion, the court answered in the affirmative two important questions that the Supreme Court has not yet addressed: whether a plaintiff can prove a Section 10(b) claim under a “price maintenance theory” of price impact, and whether a plaintiff can prove loss causation with respect to an alleged misrepresentation where the concealed risk never materialized and the defendant never made a corrective disclosure.
Factual Background
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