Understanding Causation in Private Securities Lawsuits: Building on Amgen

Abstract

With Amgen, the Supreme Court’s majority once again holds that inquiry into the alleged market impact of a misrepresentation is not required to invoke fraud on the market approach to causation so that the class can be certified. Rather than just leaving matters where they have been since the Supreme Court’s muddled encounter with causation in Basic Inc. v. Levinson, the Supreme Court’s most recent decision appears to relax some earlier-held tenets with respect to markets believed sufficiently efficient for fraud on the market to be invoked. This Article not only identifies the central flaw of Basic that has over the decades distorted applications of fraud on the market but also suggests how, building on Amgen, what the future focus should be in considering whether a suit can proceed as a class action based on fraud on the market.