Landmark Supreme Court Decision Raises Standard for Plaintiffs in Securities Fraud Class Actions
By William F. Sullivan, Christopher H. McGrath and Tracey L. DeLange
On April 19, 2005, the United States Supreme Court issued a landmark decision in Dura Pharmaceuticals v. Broudo, raising the bar for plaintiffs in securities fraud class actions. By many accounts, this is the most important decision in securities fraud litigation in more than a decade by the Supreme Court. In addition to heightening the threshold a shareholder must meet before suing to recoup for stock market losses, the ruling provides companies that are sued in securities class actions with an important tool in defending expensive and often unmeritorious cases brought after stock prices fall for reasons unrelated to any wrongdoing. The significance of this Paul Hastings victory is further underscored by the fact that the shareholders in this case were represented by one of the most prominent and successful plaintiffs securities class action law firms in the country.