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Supreme Court rules that securities fraud class action plaintiffs are not required to prove materiality of alleged misstatements

Tuesday, March 05, 2013

Bailey McCann, Opalesque New York: The US Supreme Court has issued a new ruling that will have an impact for both investment firms and investors. According to a client alert from law firm Shulte, Roth & Zable, the ruling shows that securities fraud class action plaintiffs are not required to prove the materiality of alleged misstatements as a prerequisite to class certification. The ruling was on the case Amgen Inc. v. Connecticut Retirement Plans and Trust Funds and clarifies Court of Appeals rulings around what plaintiffs had to provide before getting class action status.

The ruling comes after the Connecticut Retirement Plans and Trust Funds brought a securities fraud class action against Amgen Inc. and several of its officers, Connecticut Retirement used the fraud-on-the-market presumption, to bring the class action over what they alleged was stock price inflation on two of Amgen's flagship products. According to attorneys in the alert, "absent the fraud-on-the-market theory, individual reliance issues will typically preclude class certification, making it impossible for plaintiffs to show that common questions predominate over questions affecting only individual members."

Amgen conceded the allegations made by Connecticut Retirement but still said they didn't qualify for a class action becaus......................

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