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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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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