fraud on the market theory
- 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
- 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.
- 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.
- 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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