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High Court's ‘Halliburton' Ruling Sets Stage For Key Litigation Battles, Panelists Say

Publication Date: 
July 03, 2014
Bloomberg BNA
Yin Wilczek

Professor Joseph Grundfest comments on the effects of the Supreme Court's Halliburton decision on securities class actions suits for Bloomberg BNA. 

The U.S. Supreme Court's June 23 Halliburton decision maintaining the presumption of reliance on the market underlying the “fraud on the market” legal theory has set the stage for securities litigation battles that will rage in the federal courts for the next several years, panelists at a legal conference said June 24.

The potential key litigation areas include how plaintiffs may discharge their burden of showing that their stocks traded in an efficient market and the level of price impact defendants must show to defeat class certification, they said.

The teleconference was hosted by Stanford Law School's Rock Center for Corporate Governance and Cornerstone Research.


Joseph Grundfest, a Stanford law professor and former Securities and Exchange Commissioner, argued that if he were a defense attorney, he would “go to war” over the “reinterpretation” of “what it means to demonstrate” an efficient market. “I would argue that there is no basis in the economics and finance literature that I'm aware of that would allow you to argue that a market is efficient unless it responds relatively promptly and in a consistent manner to the disclosure of material information, because as soon as you leave that, you're entirely rudderless and there is no basis for the explanation,” he said.