In the United States Supreme Court case of Basic, Inc. v. Levinson, 485 U.S. 224 (1988), the Court ruled that in certain circumstances a securities class action would be appropriate notwithstanding what otherwise would be individualized issues of reliance. Basic created the Fraud-on-the-Market Doctrine.
The Fraud-on-the-Market Doctrine pertains to the reliance element of the federal section 10(b) claim. Because 10(b) claims require reliance, courts historically had found class wide treatment was inappropriate in Section 10(b) claims because individualized reliance issues would predominate, precluding class certification under Federal Rule 23(b)(3). In Basic, the United States Supreme Court created a solution to this... Continue reading