“SIA is very pleased with today’s decision, which will prohibit frivolous securities lawsuits for what are really business losses,” said Ira D. Hammerman, SIA senior vice president and general counsel. “The Supreme Court struck down a ruling that would have opened the courts to a flood of baseless suits every time a stock simply declined in price. The Court acted in the best interests of investors, the industry, and the economy by reaffirming the existing, extensive legal remedies available to investors with legitimate claims.”
SIA noted that the Supreme Court significantly ruled that an inflated purchase price for a security “will not itself constitute or proximately cause the relevant economic loss.” The Court opinion stated, “[w]hen the purchaser subsequently resells such shares, even at a lower price, that lower price may reflect, not the earlier misrepresentation, but changed economic circumstances, changed investor expectations, new industry-specific or firm-specific facts, conditions, or other events, which taken separately or together account for some or all of that lower price.”
