In Omnicom Second Circuit Provides Guidance On What Type Of Information Will Justify Investor Reliance For Securities Fraud

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In In re Omnicom Group, Inc. Securities Litigation, No. 08-0612-CV, 2010 WL 774311 (2d Cir. Mar. 9, 2010), the United States Court of Appeals for the Second Circuit affirmed the district court's grant of summary judgment dismissing a securities fraud class action for failure to proffer sufficient evidence to support a finding of loss causation. The Second Circuit held that plaintiffs failed to show that the decline in the issuer's stock price occurred as a result of a disclosure of new information about the alleged fraud. At most, the investor losses arose from the negative press and investor concerns about possible accounting problems. As the Second Circuit stated, however, an issuer is not responsible under the securities laws for losses arising merely from “investors" concerns that other unknown problems [are] lurking.

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