A federal appeals court has sharply raised the standard for what shareholders must prove to pursue securities cases based on false or misleading registration statements.
The Ninth Circuit Court of Appeals held last month that shareholders who purchase shares on the secondary market will have to prove that the shares can be traced back to those issued under a problematic registration statement in order to sue on faulty claims made in the prospectus. That's a tall order when companies have issued shares under multiple offerings.
Securities experts say the decision gives corporate defendants in Section 11 cases a powerful new weapon in ...