The Loss Causation Requirement for Rule 10b-5 Causes of Action: The Implications of Dura Pharmaceuticals, Inc. v. Broudo

摘要

In order to have recoverable damages in a Rule 10b-5 action, plaintiffs must establish loss causation, i.e., that the actionable misconduct was the cause oj economic losses to the plaintiffs. The requirement of loss causation has come to the fore as a result oj the U.S. Supreme Court's landmark decision in Dura Pharmaceuticals, Inc. v. Broudo. We address in this Article a number oj loss causation issues in light oj Dura, including the proper use oj event studies to establish recoverable damages, the requirement that there be a corrective disclosure, what types oj disclosure should count as a corrective disclosure, post-corrective disclosure stock price movements, the distinction between the class period and the damage period, collateral damage caused by a corrective disclosure, and jorward-casting estimates oj recoverable damages.