Legal Analysis: Anticipating How the U.S. Supreme Court May Rethink Fraud-on-the-Market Standards for Securities Class Actions
June 27, 2012
The Supreme Court is poised to decide an important issue concerning class certification in private securities fraud cases. The question presented in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds is whether securities fraud plaintiffs must prove that an alleged misrepresentation or omission is “material” before a district court may certify a class based on the “fraud-on-the-market theory” of reliance — a theory common to most securities fraud class actions. Amgen has the potential to redraw the important battle lines in private securities litigation, and may even present an opportunity for the Court to reconsider the validity or application of the fraud-on-the-market theory. This update offers a detailed analysis of the potential implications of this important case.