Introduction

Securities class actions are now big business in the Australian legal environment involving regulators, litigation funders, underwriters and of course law firms. Plaintiff firms and litigation funders continue to look for opportunities in the class actions space arising from inadequate disclosure obligations and misleading and deceptive conduct claims and principally rely on the legal concept of "fraud on the market" reliance in negotiations seeking large sums of compensation for their clients. To date, the courts in Australia have not had to rule on whether "fraud on the market" is part of the legal framework as all relevant class actions have been settled and in Timbercorp the court found that the PDS was not misleading or deceptive, so the issue didn't need to be considered. Defendants will continue to maintain that individual reliance is the relevant test for establishing the relevant cause of action. In the USA fraud on the market has been part of its legal framework for decades. However the USA is presently revisiting whether fraud on the market should continue to be the law of that country. We thought our clients would be interested to learn about potential developments in the USA in respect of this important principle which could well have implications for the future development of Australian legal principle. The articles below have been prepared by our partner Gerry Pecht, based in our Houston office and his colleagues in the USA.

See also:

The Basic presumption: securities class actions: Basic, Inc. v. Levinson, 485 U.S. 224 (1988)
The Court's grant of certiorari: Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317
Implications of the Halliburton case for securities lawsuits

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.