The Investor’s Insider:
Protecting Against Securities Fraud

ESOP Beneficiaries Are Entitled to More than “Coach Class” Fiduciary Duties

Posted on: June 25th, 2014 by Keith Dubanevich

Today, the U.S. Supreme Court ruled that Employee Stock Ownership Plan (“ESOP”) fiduciaries are not entitled to a special presumption of prudence.  Rather, they should be held to the same duty of prudence as other ERISA fiduciaries. Read more…

U.S. Supreme Court Upholds the Fraud-on-the-Market Doctrine

Posted on: June 23rd, 2014 by Keith Dubanevich

On June 23, 2014, the U.S. Supreme court issued its opinion in Halliburton Co. v. Erica P. John Fund, Inc. and upheld the fraud-on-the-market doctrine.  The doctrine sets forth that the market, including Wall Street analysts and other professional investors, reviews the material public information about the company and sets the price for a security based on that information. Read more…

Oregon Court of Appeals Decides Case Defining What Is a “Security” Under Oregon Securities Law

Posted on: June 12th, 2014 by Scott Shorr

In an opinion issued last week, Amerivest Financial, LLC v. Malouf, the Oregon Court of Appeals examined whether a particular investment, a “senior life policy settlement,” was a security under the Oregon Securities Law. Read more…

Class Action Waiver Violates FINRA Rules

Posted on: April 28th, 2014 by Nadine Gartner

The Board of Governors of the Financial Industry Regulatory Authority (“FINRA”) has held that Charles Schwab & Co., Inc. (“Schwab”) violated FINRA rules when the firm attempted to keep investors from participating in class actions by adding waiver language to customer account agreements. Read more…

London Whale Class Action Proceeding Against JPMorgan

Posted on: April 24th, 2014 by Nadine Gartner

Steve Larson describes a shareholder class action against JPMorgan on our class actions blog.  Read about it here.

“What’s Right With Securities Class Action Lawsuits”

Posted on: March 18th, 2014 by Nadine Gartner

Public Citizen, a national nonprofit organization that represents consumer interests, recently published a report extolling the benefits and advantages of securities class action lawsuits.  Read more…

Stoll Berne Investigates Galena Biopharma

Posted on: February 20th, 2014 by Nadine Gartner

Our firm is investigating potential claims concerning whether Galena Biopharma, Inc. (“Galena”) (NASDAQ: GALE), its board of directors and/or officers violated state or federal securities laws, or breached fiduciary duties owed to shareholders. Read more…

U.S. Supreme Court to Review Stock Drop Case

Posted on: January 14th, 2014 by Nadine Gartner

The United States Supreme Court has granted certiori in Fifth Third Bancorp v. Dudenhoeffer, No. 12-751.  The question before the court is whether plaintiffs must allege that the fiduciaries of a stock plan abused their discretion by remaining invested in employer stock to overcome the presumption that the decision to invest in employer stock was reasonable. Read more…

U.S. Supreme Court Examines the Fraud-on-the-Market Doctrine

Posted on: November 19th, 2013 by Scott Shorr

Last week, the United States Supreme Court accepted review (certiorari) of the Fifth Circuit’s decision in Halliburton Co. v. Erica P. John Fund, Inc.  The Supreme Court will consider whether to overrule or limit its prior holding in Basic Inc. v. Levinson, 485 U.S. 224 (1987).

In Basic, the Supreme Court held that a plaintiff asserting a federal securities fraud claim under SEC Rule 10b-5 does not have to prove individual reliance on a particular misrepresentation to recover.  Instead, investors are presumed to rely on the market price of an actively traded security because the price reflects the material public information known about the company.  The presumption is rebuttable under certain circumstances.

This is known as the “fraud-on-the-market” doctrine.   Essentially, the market, including Wall Street analysts and other professional investors, reviews the material public information about the company and set the price for the security based on that information.

Basic has been established precedent for over twenty-five years.   The Supreme Court has cited and relied upon Basic in a number of subsequent securities fraud cases.  Just this year, a majority of the Supreme Court reaffirmed its commitment to Basic in Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, 113 S. Ct 1184, 1192-93 (2013).

Halliburton will test the Supreme Court’s adherence to precedent and the principle of stare decisis.  The case is significant because, without a presumption of reliance, it will be more difficult to certify federal securities 10b-5 class cases and hold companies accountable for fraud.  Without the fraud-on-the-market doctrine, companies could, with relative impunity, provide fraudulent financial statements to the market – and thus increase their stock price – with almost no risk of being held fully accountable for the cost of that fraud.

Interestingly, the Oregon Supreme Court recently held that the Oregon Securities Law, ORS 59.137, also incorporates the fraud-on-the-market doctrine as a matter of state securities law.   Oregon v. Marsh & McLennan Co’s, Inc, 353 Or. 1 (2012).*  The United States Supreme Court’s decision in Halliburton, which interprets federal law, can have no impact on the Oregon Supreme Court’s decision in Marsh, which interprets what the Oregon legislature intended with respect to state law when it enacted ORS 59.137 in 2003.  Marsh is based on state statutory interpretation and not principles of federal law.



* Along with the Oregon Department of Justice, Stoll Berne represents the State of Oregon in this matter.

FINRA Settles Case Against Oppenheimer & Co., Inc. Relating to Alleged Sales of Over One Billion Shares of Unregistered Penny Stocks

Posted on: August 6th, 2013 by Mark Friel

On August 5, 2013, the Financial Industry Regulatory Authority (“FINRA”) agreed to settle a case in which the regulatory organization alleged that Oppenheimer & Co., Inc. (“Oppenheimer”) had sold unregistered securities in violation of Section 5 of the Securities Act of 1933, failed to adequately supervise the sale of low-priced securities, failed to follow up on red flags involving the customers, sales and account activity, and failed to monitor patterns of suspicious activity that should have been identified and investigated through the company’s anti-money laundering program. Read more…

Second Circuit Rules on Application of Class Action Tolling Doctrine to Statutes of Repose

Posted on: July 3rd, 2013 by Scott Shorr

In a case mentioned on this blog last December, Second Circuit Considers Statute of Repose, the Second Circuit ruled last week that the American Pipe tolling doctrine does not toll the statute of repose for absent class members’ claims under the 1933 Securities Act.  Police and Fire Retirement System of the City of Detroit v. IndyMac MBS, Inc., 2013 WL 3214588 (2nd Cir. 2013). Read more…

Fifth Circuit Rejects Halliburton’s Attempt to Defeat Class Certification With Price Impact Evidence

Posted on: May 14th, 2013 by Mark Friel

On April 30, 2013, the U.S. Court of Appeals for the Fifth Circuit, on remand from the U.S. Supreme Court, issued a decision in the securities fraud case of Erica P. John Fund, Inc. v. Halliburton Co.  In EPJ Fund, the Fifth Circuit rejected Halliburton’s attempt to defeat class certification by offering evidence of the absence of price impact. Relying on the earlier decision of the Supreme Court in Amgen v. Conn. Ret. Plans and Trust Funds, 133 S. Ct. 1184 (2013), the Fifth Circuit first explained that, while a misrepresentation’s materiality must at some point be proven in order to invoke the “fraud-on-the-market” presumption of reliance, the resolution of the question presents a common issue that affects all class members’ claims equally. Next, the court held that because Halliburton’s price impact evidence was offered only for the purpose of generally rebutting the presumption of reliance, and affected the ability of all class members to succeed on the merits of their claim, it could not be considered at class certification.

Legal Disclaimer

The information contained in this blog does not constitute legal advice, and does not create an attorney-client relationship. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this blog.

About this blog

The purpose of this blog is to provide information to the general public and to practitioners about developments that may impact Oregon investors.

About the authors

  • Keith Dubanevich

  • Mark Friel
  • Keith Dubanevich has extensive experience handling antitrust, consumer and securities cases. Until joining the Portland, Oregon law firm Stoll Berne as a shareholder, he was the Associate Attorney General and Chief of Staff at the Oregon Department of Justice.
  • Scott Shorr

  • Mark Friel
  • Scott Shorr, one of the firm's managing shareholders, is a trial and appellate attorney who handles a variety of complex business, securities and consumer class action litigation. Scott was the arguing counsel before the United States Supreme Court in GEICO General Ins. Co. v. Edo and Safeco Ins. Co. of America v. Burr. Scott practices in state and federal trial court, all appellate courts and before the Financial Industry Regulatory Authority (FINRA (formerly the NASD)).
  • Nadine Gartner

  • Mark Friel
  • Nadine Gartner’s practice focuses on complex business litigation and class actions. Prior to becoming a lawyer, Nadine worked as an investment banking analyst.
  • Mark Friel

  • Mark Friel
  • Mark Friel is a litigation attorney who practices in the areas of complex business, consumer, securities, antitrust, and class action litigation. He is a shareholder at the law firm of Stoll Berne in Portland, Oregon.
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