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Abstract: 

Adjudication of the “truth on the market” defense in securities fraud cases was traditionally reserved for trial on a full evidentiary record. However, in the wake of the Supreme Court’s 2021 Goldman Sachs decision, corporate defendants have pressed the district courts to entertain truth on the market arguments at the class certification stage as a means to “sever the link” between the alleged misrepresentations and the stock drops following disclosure of the fraud. This article explores the limitations of the truth on the market defense as illustrated by recent decisions from the Third and Ninth Circuits.

Keywords: “All Probative Evidence” of Price Impact; Basic Inc. v. Levinson; Ark. Teacher Ret. Sys. v. Goldman Sachs; San Diego County Employees Retirement Association v. Johnson & Johnson; Jaeger v. Zillow Group., Inc.

Affiliations:  1: Kessler Topaz Meltzer & Check, LLP; 2: Kessler Topaz.