fraud on the market theory

Definition of "fraud on the market theory"
  1. A liability theory in the context of securities fraud cases. It argues that a defendant's significant false statements about a security traded in an open market, that impact the security's price, are assumed to have been trusted by a plaintiff who bought the security and faced a financial loss
How to use "fraud on the market theory" in a sentence
  1. The investors filed a lawsuit based on the fraud on the market theory, alleging that false statements about the company's earnings had affected the share price.
  2. In the case of securities fraud, the prosecutor argued utilizing the fraud on the market theory, explaining how the defendant's misleading statements influenced the stock price.
  3. When the plaintiff suffered financial losses after purchasing shares, they sought recourse under the fraud on the market theory, stating the defendant's substantial misrepresentation affected the stock value.

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