First Solar and its Effect on Securities Fraud Actions

On January 31, 2018, the Ninth Circuit Court of Appeals issued an important decision in the First Solar case resolving an intra-circuit split as to the proper test for loss causation in securities fraud actions. The decision sides with a line of cases stating that plaintiffs need only show a causal connection between the facts that were misrepresented and the resulting loss. Those cases stand in sharp contrast to a group of cases that set forth a more restrictive test that would only allow plaintiffs to recover where the market specifically learns of defendants' precise fraudulent practices. First Solar significantly eases the burden on plaintiffs to prove loss causation in the 9th Circuit by allowing plaintiffs to show loss causation where defendants' revealed information that is related to the fraud (for example, an earnings miss resulting from the fraud) rather than having to show that the defendants revealed the actual and specific fraud itself.   

Join Carol C. Villegas and James Christie for a discussion on these issues. Ms. Villegas is a partner and Mr. Christie is an associate at Labaton Sucharow LLP. Ms. Villegas and Mr. Christie represent institutional investors (such as public pension funds and hedge funds) who have suffered financial losses in the stock market as a result of securities fraud committed by publicly traded companies and their officers and executives.        

Learning Objectives:

1. Familiarize yourself with the current landscape of loss causation law standards across the country, circuit by circuit, as it pertains to securities fraud
2. Analyze the Ninth Circuit's decision in First Solar and what it means for both plaintiffs and defendants in securities fraud actions going forward
3. Develop best practices for pleading loss causation and defending against loss causation allegations in today's legal environment
4. Discuss whether the issue is ripe for Supreme Court review or whether the seminal loss causation case Dura v. Broudo remains intact