The Federalist Society

Re-Emergence of the Reliance Requirement

June 27, 2008

It is well-established that plaintiffs bringing private claims alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “1934 Act”) and Rule 10b-5 promulgated thereunder must prove that they relied on the statements or omissions they challenge as materially false or misleading.1 It is equally well-established that in order to maintain a lawsuit on behalf of a class pursuant to Federal Rule of Civil Procedure 23(b)(3), plaintiffs must demonstrate that the common issues to be resolved on behalf of all class members predominate over any individual issues specific to particular class members, rendering class treatment the most efficient means of adjudication...

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The Federalist Society