Securities 101: A Circuit Split in the Standard for Pleading Loss Causation in Securities Fraud Cases

February 25, 2016

Jonathan C. Schwartz

ABA Securities Litigation Newsletter

Jonathan C. Schwartz

Most securities fraud cases are brought under section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the Securities and Exchange Commission (SEC). Section 10(b) makes it unlawful to “use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe. . . .” Rule 10b-5 prohibits any person from

mak[ing] any untrue statement of a material fact or . . . omit[ting] to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading . . . in connection with the purchase or sale of any security.

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