
Fraud-on-the-Market Liability in the ESG Era
Fraud-on-the-market (“FOTM”) suits are thought to generate considerable benefits for society – namely, those associated with increased stock-market liquidity and price accuracy. But these suits are also said to impose outsized costs. The federal courts have thus long tried to efficiently screen out FOTM claims that do not sufficiently implicate the benefits, even if judges do not always describe their work in these terms.
In Halliburton II (2014), the Supreme Court rejected arguments for shifting the relevant FOTM screening framework to an inquiry into price impact (burden on the plaintiff) rather than on the longstanding inquiry into market efficiency (burden … Read more