Comments on: Dura and Section 10(b)

By: Elizabeth Nowicki

Elizabeth Nowicki — Tue, 14 Nov 2006 23:12:53 +0000

Excellent comments, both. I have printed out three of Jack Coffee’s NYLJ articles on the topic; I will report back.
Thank you both, again.

By: dura bull

dura bull — Tue, 14 Nov 2006 17:33:11 +0000

Professor Coffee has examined this concept, I believe, calling the notion “phantom losses.” I don’t believe Dura forecloses such a theory of liability, although establishing the other elements could be difficult, as the previous commentor noted. Also, under the common law of fraud, an actual loss in value is probably required. This is important because 10(b) is an implied private action that looks to the common law for direction, so a court might say that a complaint must allege an actual loss. (But of course there is no fraud-on the-market theory in the common law, so who knows.) Some plaintiff will give it a shot one day, I’m sure.

By: brainwidth

brainwidth — Mon, 13 Nov 2006 23:06:13 +0000

You have a falsity problem. The securities laws only impose a duty to disclose material facts that are necessary to make disclosed statements, whether mandatory or volunteered, not misleading. The principal issue, it seems to me, is whether the pharmaceutical company’s failure to disclose the development of Drug 2 renders the company’s literally true statements about Drug 1 misleading.