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Corporations have spent billions of dollars defending, and frequently settling, the inevitable class action litigation brought by shareholders (or more precisely, aggressive counsel) accusing corporations and their boards of securities fraud whenever there is a drop in the corporation’s stock price. For the last three decades, a key driver of those litigations has been the widespread application of the “fraud-on-the-market” presumption of reliance. Under the fraud-on-the-market doctrine, the putative class plaintiff need not demonstrate that any (or all) class members actually relied on an alleged false or misleading statement. Rather, the plaintiff class relies on a rebuttable presumption that, in an efficient market, the company’s stock price reflects all publicly available information. However, a series of recent decisions suggests that courts are actively considering the continued viability of the fraud-on-the-market doctrine.

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