Estimating plaintiff damages in securities class actions cases

When publicly traded companies violate information disclosure regulations, stock prices can be distorted, leading to investor losses. However, given the inherent risks of investing in the stock market and the constant influx of news affecting stock prices, those disclosure violations might only account for a portion of an investor's loss. The remaining losses may be due to external factors beyond the company's control. Consequently, investors who try to sue can face difficulty proving the cause-and-effect relationship between their losses and a company's misconduct, in order to establish the precise amount of damages.In the United States, courts tend to assume an efficient market, where new information is quickly absorbed into the market and immediately is reflected in the fluctuation of the share price. In such circumstances, the assumed damages from a failure of disclosure tend to be simply the change in stock price once the information is revealed.This approach, however, may not work in the context of less efficient markets, such as capital markets in less industrialized countries or in cryptocurrency and other emerging markets. This article, therefore, proposes an alternative methodology for establishing damages in such markets: one that compares the change in price of the company at fault with the change in price of the overall index of the companies in the same field.

کلیدواژه ها:

Civil Liability ، Confidential Information ، Presumption of Causation ، Market-Based Causation ، Stock Market ، remedy