Does Dura Matter? Loss Causation and the Implications of Dura Pharmaceuticals V. Broudo
36 Pages Posted: 31 Jul 2009 Last revised: 31 Mar 2010
Date Written: July 31, 2009
Abstract
Dura Pharmaceuticals v. Broudo has been heralded as the most important securities case of the past decade. Many have suggested that its requirement that plaintiffs provide evidence of a significant stock price decline associated with a corrective disclosure will make it significantly harder to bring securities fraud cases. We use event study techniques to examine how hard it would have been to meet this requirement in a comprehensive dataset of 10b-5 cases in the two decades before Dura was decided. If those cases are representative of what cases might be brought post-Dura, our findings suggest that Dura will not have much of an effect.
Keywords: event study, statistical evidence, securities fraud, 10b-5, Dura, loss causation
JEL Classification: G38, K00, K22, K40, K41
Suggested Citation: Suggested Citation