On November 15, 2013, the Supreme Court granted certiorari in a
case, Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317, that
should be on the radar of every securities lawyer. The reason is
that the Court will consider the continuing validity of the
class-wide reliance presumption set forth in Basic, Inc. v.
Levinson, 485 U.S. 224 (1988). If Basic is overruled or
significantly modified, the case will have a significant impact on
putative federal securities class actions.
The Court's 1988 ruling in Basic was a watershed for class
certification in securities cases. This is because the Court
eliminated the need for plaintiffs to show individual reliance on
alleged misrepresentations in cases brought under Section 10(b) of
the Securities Exchange Act of 1934 and SEC Rule 10b-5. Instead,
reliance on alleged misrepresentations can be presumed. This
presumption is based on the theory that efficient markets
incorporate all publicly available information, including
