The Problem of Reliance in Securities Fraud Class Actions

This Essay analyzes the Supreme Court’s decision in Halliburton II. I argue that, although the opinion appears to do little other than establish a minor change in the class certification procedure, the probable impacts are subtler and more significant. Among other consequences, the opinion may spark congressional efforts to repeal or cut back the fraud-on-the-market presumption; reduce plaintiffs’ bargaining leverage and prospects for success; open new avenues for certification of state law cases; influence the rate of filing and the types of cases that are filed; increase the frequency of settlement classes; and increase litigation costs.