Securities Fraud Litigation: A Comprehensive Guide to Rule 10b 5 Private Actions

104 questions on securities fraud litigation, answered and cited by the UpLaw editorial team.

• Are generic motives like executive compensation enough to plead scienter?
• At what two moments is a securities fraud case actually decided?
• Can a company indemnify officers for Securities Act liabilities?
• Can an outside auditor be sued privately under Rule 10b-5?
• Can context turn puffery into an actionable statement?
• Can investors form a group to become lead plaintiff?
• Can only purchasers and sellers sue under Rule 10b-5?
• Does a misstatement below 5% of revenue automatically fail the materiality test?
• Does recklessness satisfy the scienter requirement?
• Does the PSLRA discovery stay apply in state-court 1933 Act cases?
• Does the PSLRA discovery stay excuse a defendant from preserving evidence?
• Do GAAP violations establish scienter?
• How are damages measured in a Rule 10b-5 case?
• How broadly is “in connection with the purchase or sale of a security” construed?
• How can a company reduce its exposure to securities fraud litigation before anything goes wrong?
• How did Loper Bright change the securities-law landscape?
• How do defendants attack a short-seller report as a corrective disclosure?
• How does a Rule 10b-5 claim differ from a Securities Act Section 11 claim?
• How does proportionate liability work under the PSLRA?
• How does the PSLRA lead-plaintiff process work?
• How does the PSLRA's 90-day lookback cap on damages work?
• How does the Tellabs standard compare with ordinary Iqbal/Twombly plausibility?
• How do insider stock sales bear on scienter, and how do 10b5-1 plans rebut them?
• How do Rule 9(b) and the PSLRA's pleading requirements interact?
• How is a public-company D&O insurance tower structured?
• How is “largest financial interest” calculated in a lead-plaintiff contest?
• How is the materiality of a contingent event like merger negotiations assessed?
• How much weight do confidential witness allegations carry?
• How should a company coordinate an internal investigation with a parallel class action and SEC inquiry?
• Is Macquarie the end of Item 303 omission theories?
• Is there private aiding-and-abetting liability under the securities laws?
• Is the safe harbor's “actual knowledge” standard higher than recklessness?
• Must a securities plaintiff prove loss causation or materiality at class certification?
• What allegations actually establish scienter in a securities complaint?
• What are the recognized ways to prove loss causation?
• What are the six elements of a private Rule 10b-5 claim?
• What are the statutes of limitations and repose for securities fraud claims?
• What are the two prongs of the PSLRA safe harbor, and why does it matter that they are disjunctive?
• What clawback exposure does a CFO face after a restatement?
• What did China Agritech v. Resh hold about class-action tolling?
• What did Cyan v. Beaver County decide, and what is a federal-forum provision?
• What did Dura Pharmaceuticals v. Broudo hold about loss causation?
• What did Goldman Sachs v. Arkansas Teacher Retirement System hold?
• What did Halliburton II decide about the Basic presumption?
• What did Lorenzo v. SEC decide about disseminating someone else's false statement?
• What did Macquarie Infrastructure v. Moab Partners decide about pure omissions?
• What did Matrixx Initiatives v. Siracusano hold about statistical significance?
• What did Santa Fe Industries v. Green hold?
• What did SEC v. Jarkesy change about SEC enforcement?
• What did Stoneridge hold about scheme liability?
• What did the Private Securities Litigation Reform Act change?
• What does Gustafson v. Alloyd limit about Section 12(a)(2)?
• What does the PSLRA safe harbor for forward-looking statements protect?
• What is an event study, and how is it used in securities litigation?
• What is an inflation ribbon, and how is it attacked?
• What is Omnicare's caveat about how much an issuer must disclose behind an opinion?
• What is Section 20(a) control-person liability?
• What is the Affiliated Ute presumption, and when does it apply?
• What is the “bespeaks caution” doctrine, and does it survive the PSLRA?
• What is the confounding-information problem in loss causation?
• What is the “core operations” inference?
• What is the demand-futility standard for a related derivative suit in Delaware?
• What is the difference between the statement prong and the scheme prongs of Rule 10b-5?
• What is the difference between transaction causation and loss causation?
• What is the due-diligence defense to a Section 11 claim?
• What is the first thing a company should do when a securities class action is filed?
• What is the fraud-on-the-market presumption from Basic v. Levinson?
• What is the Goldman “mismatch” analysis between misstatement and corrective disclosure?
• What is the group-pleading doctrine, and did the PSLRA abolish it?
• What is the half-truth rule, and why is it the workhorse of disclosure liability?
• What is the materiality standard in securities fraud?
• What is the Morrison transactional test for extraterritorial reach?
• What is the negative-causation defense under Section 11(e)?
• What is the price-maintenance (inflation-maintenance) theory?
• What is the PSLRA's automatic discovery stay?
• What is the PSLRA's strong-inference pleading standard for scienter?
• What is the puffery defense, and where is the line?
• What is the three-step Tellabs method for evaluating a strong inference of scienter?
• What is the tracing requirement under Section 11, and what did Slack v. Pirani hold?
• What makes cautionary language “meaningful” under the safe harbor?
• What mental state does Rule 10b-5 require, and is negligence enough?
• What must a plaintiff show to invoke the Basic presumption?
• What options does a long-term shareholder who never sold have after a securities fraud?
• What parallel proceedings typically accompany a securities class action?
• What question did Lorenzo leave open, and how have the circuits divided?
• What settlement ratios should a practitioner expect in securities class actions?
• What sworn certification must a named securities plaintiff file?
• What “unique defenses” rebut the lead-plaintiff presumption?
• When does a company have a duty to disclose under Rule 10b-5?
• When is a statement of opinion actionable under Omnicare?
• When is the PSLRA safe harbor unavailable?
• Where does the private right of action under Rule 10b-5 come from?
• Where do securities plaintiffs get facts if discovery is stayed?
• Who can be sued under Securities Act Section 11?
• Who “makes” a statement for purposes of Rule 10b-5(b) after Janus?
• Whose state of mind counts when the defendant is a corporation?
• Why does an “in-and-out” trader have no recoverable loss?
• Why does the burden of persuasion on price impact rarely change the outcome?
• Why does the fraud exclusion in a D&O policy rarely defeat coverage?
• Why do virtually all surviving securities class actions settle?
• Why is a Delaware Section 220 books-and-records demand valuable to securities plaintiffs?
• Why is a hypothetical risk factor dangerous when the risk has already materialized?
• Why is Escott v. BarChris the foundational due-diligence case?
• Why is falsity a “when-made” question in securities fraud?