On June 23, the U.S. Supreme Court issued its much-anticipated
decision in Halliburton Co. v. Erica P. John Fund, No.
13-317, 573 U.S. __ (2014) ("Halliburton"). The
Court held that defendants in securities fraud class actions may
rebut the presumption of investor reliance on public and material
misrepresentations before class certification, by presenting
evidence that the alleged misrepresentations did not actually
affect the stock price. However, the Court rejected arguments that
the presumption should be replaced with a requirement that
plaintiffs prove actual reliance on the alleged
misrepresentations.
The State of the Law Before
Halliburton
In Basic v. Levinson, 485 U.S. 224 (1998)
("Basic"), the Supreme Court adopted the
fraud-on-the-market theory and established the general presumption
that stock prices in an efficient market reflect all public and
material information. Since Basic, plaintiffs in
securities fraud class actions have invoked this presumption
