Securities Fraud Damages

Abstract

A private right of action is not expressly mentioned in either §10(b) or Rule 10b-5 of the Securities Exchange Act of 1934, and hence such a right must be implied. To justify a reasonable cause of action, the plaintiff must prove: (1) a material omission or misstatement; (2) made by the defendant with “scienter” (defined later); (3) which was the actual and proximate cause of injury to the plaintiff; (4) and was relied upon by the plaintiff.³ To reach the issue of damages, defendants’ liability in terms of satisfying the above four elements must be assumed.

Citation

Cornell, B., Hirshleifer, J.I. and Haut, J.N. (2005), "Securities Fraud Damages", Gaughan, P.A. and Thornton, R.J. (Ed.) Developments in Litigation Economics (Contemporary Studies in Economic and Financial Analysis, Vol. 87), Emerald Group Publishing Limited, Leeds, pp. 29-57. https://doi.org/10.1016/S1569-3759(05)87003-2