West v. Prudential Securities, Inc. case brief summary
282 F.3d 935 (7th Cir. 2002)
CASE FACTS
The investors alleged that their stockbroker who worked for the company told the investors that a certain bank was going to be acquired at a big premium. This statement was a lie. The investors traded on this information which they thought was confidential. In their lawsuit, the investors sought class certification for everyone who bought the bank's stock during the months when the stockbroker was making his false statements.
DISCUSSION
CONCLUSION
The order granting class certification was reversed.
Recommended Supplements for Corporations and Business Associations Law
282 F.3d 935 (7th Cir. 2002)
CASE SYNOPSIS
Plaintiffs investors sued defendant
investment company alleging a securities-fraud action. The United
States District Court for the Southern District of Illinois granted
class certification under the fraud-on-the-market doctrine. The
company moved for an interlocutory appeal pursuant to Fed. R.
Civ. P. 23(f).CASE FACTS
The investors alleged that their stockbroker who worked for the company told the investors that a certain bank was going to be acquired at a big premium. This statement was a lie. The investors traded on this information which they thought was confidential. In their lawsuit, the investors sought class certification for everyone who bought the bank's stock during the months when the stockbroker was making his false statements.
DISCUSSION
- The court of appeals held that the fraud-on-the-market doctrine did not apply because the information was not made available to the public.
- The investors failed to identify any causal link between the non-public information and securities prices.
- Thus the record did not support the extension of the fraud-on-the-market doctrine to the alleged non-public statements.
CONCLUSION
The order granting class certification was reversed.
Recommended Supplements for Corporations and Business Associations Law
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