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Since Basic v. Levinson,1 investors bringing claims under §10(b) of the Securities Exchange Act of 1934 have enjoyed a rebuttable presumption of reliance on alleged material misstatements or omissions, provided the shares they transacted traded in an efficient market. Because few securities cases go to trial, there have been few cases in which courts have considered whether defendants have, on an individual basis, rebutted the presumption of reliance. A recent decision by Judge Shira A. Scheindlin of the U.S. District Court for the Southern District of New York, however, "is just such an extraordinary case."2 Scheindlin’s decision in GAMCO v. Vivendi demonstrates that the presumption is indeed rebuttable, particularly where shareholders made investment decisions based on sophisticated valuations detached from a security’s market price and the defendant’s alleged misrepresentations.

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