Legal Analysis: Anticipating How the U.S. Supreme Court May Rethink Fraud-on-the-Market Standards for Securities Class Actions

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The Supreme Court has granted review in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds to address the findings that a district court must make before certifying that a securities fraud case may proceed as a class action.

- The question presented is whether securities fraud plaintiffs must prove that an alleged misrepresentation or omission is “material” as a predicate to class certi-fication based on the so-called “fraud-on-the-market theory,” which is a linchpin of class treatment in most securities fraud cases.

- The Court’s decision in Amgen has the potential to redraw the important battle lines in private securities litigation, since class certification is often pivotal to the outcome in such lawsuits.

- There is a possibility Amgen could have an even more fundamental impact if the Court takes the opportunity to reconsider the validity or appropriate application of the fraud-on-the-market theory.

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