Fraud on the Market After Amgen
James D. Cox
Duke University School of Law
December 11, 2013
Duke Journal of Constitutional Law & Public Policy, Vol. 9, No. 101, 2013
Contemporary applications of fraud on the market have been premised on the efficient market hypothesis, a theory that describes stock price formation in a perfect world rather than the issue central to the role of fraud on the market - how investors behave (i.e., rely). As a result, fraud on the market has been out of step with how investors reach investment decisions. This article examines the underlying tenets of recent Supreme Court decisions addressing causation in securities fraud cases to reason that fraud on the market can be reconfigured slightly so as to be consistent with both the role that presumptions have played in the Roberts Court as well as congressional intent underlying The Private Securities Litigation Reform Act. As developed here, reliance will persist as an element of the case but in a manner that accommodates a wide range of active and passive investment behavior such as indexing and style investing.
Number of Pages in PDF File: 30
Date posted: December 13, 2013