News & Events

News & Events

2.23.2017

Why Abolishing Basic Would Backfire — Badly

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Doug Greene authored a February 22 Law360 article titled “Why Abolishing Basic Would Backfire — Badly.” Greene discusses the implications of the fraud-on-the-market presumption of reliance established by the U.S. Supreme Court in 1988 in Basic Inc. v. Levinson, 485 U.S. 224 (1988), for securities class action lawsuits.

Executives who do their best to tell the truth really have nothing to fear under the securities laws. The law gives them plenty of protection, and the predictability of the current system allows them to understand their risk and resolve litigation with certainty. It would be a mistake to try to abolish securities class actions. Abandoning Basic would backfire — badly.