Supreme Court Commentaries
Constitutional Law | Law
Created pursuant to section 10 of the 1934 Securities Act, Rule 10b-5 is a cornerstone of the federal securities laws. The federal courts' interpretations have largely defined the rule, which seeks to remedy a broad range of securities fraud and market manipulation. Elements of the rule, such as "scienter" and "reliance," were defined at length by earlier court decisions. However, no court had held definitively whether a private plaintiff bringing an action under the rule must demonstrate a causal connection between the alleged fraud and the subsequent loss to that plaintiff. This issue, referred to as "loss causation," was decided by the Supreme Court in Dura Pharmaceuticals v. Broudo.
Oleg Cross, Dura Pharmaceuticals v. Broudo: The Unlikely Tort Of “Securities Fraud”: Dura Pharmaceuticals v. Broudo, 2 Duke Journal of Constitutional Law & Public Policy Sidebar 59-66 (2007).