Many investors rely on advice from their stockbroker or financial adviser, as opposed to independently reviewing securities filings. In turn, securities laws brokers and financial advisors to be forthright with the advice they dispense.

If a company’s SEC filings are discovered to contain false statements, investors may have an actionable securities fraud claim. Under current law, investors expect a stock’s price to reflect all publicly available information known about the particular security. Consequently, defrauded investors do not have the burden of proving they relied on any false filing statements. Rather, they need only provide evidence that supports a fraud on the market claim.

That presumption is thanks to applicable securities laws, as well as a decision by the U.S. Supreme Court. However, the Court recently announced that it would be revisiting that landmark securities fraud case, Basic v Levinson, which was decided in 1988.

If the decision is overturned, it may become harder for private investors to bring securities class actions. Even if investors have suffered large losses, it is important to understand the applicable procedures needed to hold defendants accountable for their misconduct. In particular, exchanging communications after the allegedly fraudulent conduct has been discovered might be inadvisable, unless such communications are made through an attorney.

A securities law attorney can work to in an effort ensure that no inadvertent admissions or waivers are made when making complaints of misconduct. An attorney might also have alternative forums to suggest for seeking a potentially quicker resolution, such as securities arbitration or mediation.

Source:, “Justices to Revisit Securities Fraud Suits,” Adam Liptak, Nov. 15, 2013

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