Category Archives: Securities

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Thankfully For Plaintiffs, Halliburton Can Still Defraud the Entire Market

Halliburton Co. v. Erica P. John Fund was finally decided this summer (for background on this case, including the issues, see my first two articles on the case here and here) and the presumption of reliance on the integrity of the stock price that was created in Basic v. Levinson was upheld. The fraud-on-the-market theory is alive and well. Halliburton (the petitioners to the Court and the defendants in the class action) also lost on their request to require that plaintiffs in securities class actions prove “price impact” at the class certification stage. They won a small victory by granting defendants in securities class actions the ability to rebut the presumption of an efficient market at the class certification stage so they will no longer have to wait until arguments are made on the merits of the case in order to address it.

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Securities Laws Still Apply to Robot Dinosaurs

Jimmy wants to start a business that makes small robot dinosaurs. He spent his time learning robotics and computer-based design in college and now wants to put it to use by creating miniature versions of the Jurassic Park animatronic dinosaurs that kids can play with. He does a few designs, for a velociraptor, triceratops and brachiosaurus and thinks that he can make and sell them for a profit. So he starts a company, Mesozoic Toys. Jimmy needs money to start building and advertising his products, however, and in doing so he needs to make sure that he doesn’t run afoul of securities laws.

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Fraud on the Market 2: Finding the Middle Ground

Those who read my first fraud-on-the-market article may have noticed that I only discussed the two options for the Supreme Court to take regarding the use of the fraud-on-the-market theory as a way to show commonality and predominance at class certification. Those two options were keep it or toss it. There may be a middle ground, however. While the two sides in the case have remained on opposite ends of the dichotomy, some third parties have weighed in suggesting a option that would act as a compromise between the two extremes.

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Crowdfunding Part 2: The Pros and The Problems

This post will be the second post on the new concept of crowdfunding. If you haven’t, take some time to read the first installment. Crowdfunding is billed as being a savior of small business and a boost to the power of the everyman entrepreneur by tapping into the power of the internet and the masses to provide funding for their businesses. This post will give an initial idea of the pros of having this legislation and the potential problems that might arise.

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Fraud on the Market

Imagine that you bought 1000 shares of stock in Jimmy Co., a large publicly traded pharmaceutical company at $50 per share. Before you bought your stock, Jimmy Co.’s officers had been claiming that a new drug that was being developed would greatly enhance the ability to treat the plague. They predict that the drug will sail through the FDA testing because the drug is perfectly safe and the manufacturing process is up to code. They will get approval and be on the market in two years. Their stock price has been rising ever since that announcement and is now where you bought it, at $50. Continue reading

Photo taken by Bryson Davis.

Introduction to Crowdfunding

This post will be the first post on the new concept of crowdfunding. Crowdfunding is billed as being a savior of small business and a boost to the power of the everyman entrepreneur by tapping into the power of the internet and the masses to provide funding for their businesses. This first post will give you the basics of what crowdfunding is and what restrictions the JOBS Act (the law which created it) places on it. Continue reading