Ore. is 1st State to Adopt Fraud-On-The-Market Theory
Lane Powell Shareholder Milo Petranovich was quoted in a December 17 Law360 article titled “Ore. is 1st State to Adopt Fraud-On-The-Market Theory.” The article discussed a case against insurance firm Marsh & McLennan Cos. Inc. and Oregon’s subsequent acceptance of the fraud-on-the-market theory (“FOTM”), a method used by investors to prove they bought securities based on alleged false statements. The FOTM has been a topic of interest in securities fraud cases since 1988, when the U.S. Supreme Court first acknowledged the theory in issuing the landmark ruling in Basic Inc. v. Levinson. On December 13, Oregon became the first state Supreme Court to adopt this theory, making Oregon securities law consistent with federal law. In the case against Marsh & McLennan Cos., Inc., the Oregon Supreme Court held that the state’s retirement plan that purchased defendant’s shares in the open market could bring a state securities claim alleging materially misleading statements and could establish reliance through the presumption. It’s still uncertain what influence this decision could have on Oregon securities fraud cases. Petranovich commented on the impact of Oregon adopting the FOTM.
The potential impact of the case on Oregon state litigation also remains unclear, according to Lane Powell PC attorney Milo Petranovich. The decision only addressed securities sales that are made in open markets, he said, and left open the question of whether Oregon securities law requires a plaintiff to show that a defendant acted with scienter, or knowledge of wrongdoing.
Read the article.