Private securities actions in the lower courts have raised an important doctrinal question: can a defendant in a private securities action be held liable for a misrepresentation that purportedly causes artificial inflation to come out of a stock price, without proof that the defendant’s misconduct was responsible for the initial inflation of the stock price? In other words, can there be loss causation without price impact? The Supreme Court’s recent decisions in Haliburton I and II indicate that because price impact is the obverse of loss causation, it is essential to proving that a defendant’s fraud caused a plaintiff’s economic loss.

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Mark A. Perry & Kellam M. Conover
Cite as 71 N.Y.U. Ann. Surv. Am. L. 189 (2015)