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Searching for an Efficient Market with Cross-Listed Securities: Denial of Class Certification in Deutsche Bank Illustrates Increased Scrutiny of the Fraud on the Market Doctrine

The recent decision in IBEW Local 90 Pension Fund v. Deutsche Bank AG illustrates the increased scrutiny that district courts are giving to the “efficient market” issue at class certification in securities cases. In particular, the case provides insight in the context of securities, like Deutsche Bank’s global registered shares (GRSs), that are traded simultaneously on multiple exchanges around the globe. The case also provides general instruction on the evidentiary standards plaintiffs must meet to satisfy their burden of proof at the class certification stage, especially in relation to use of expert witnesses on the issue of market efficiency. Finally, the decision is notable because it found that the named plaintiffs could not serve as class representatives since, as so-called “in and out” traders, they both bought and sold shares before the conclusion of the proposed class period.

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