Recession-Era Loss Causation Disentangling Under Dura

The element of loss causation has been an important battleground in lawsuits brought by plaintiffs seeking to recover investment losses under Section 10(b) of the Securities Exchange Act of 1934. This trend has continued as courts work their way through cases related to the financial crisis of 2007 and 2008, where the causes of claimed losses are uncertain given the impact of the crisis.

Loss causation is an element of Section 10(b) and is codified in the Private Securities Litigation Reform Act. It derives from the tort concept of proximate cause, and requires not only that a claimed loss be foreseeable but also that the plaintiff prove that the alleged fraud in fact caused the particular loss for which the plaintiff seeks to recover.

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