Basic Inc. v. Levinson
E590642
Basic Inc. v. Levinson is a landmark 1988 U.S. Supreme Court case that established the fraud-on-the-market theory and clarified the materiality standard for misstatements in securities fraud class actions.
All labels observed (1)
| Label | Occurrences |
|---|---|
| Basic Inc. v. Levinson canonical | 1 |
Statements (47)
| Predicate | Object |
|---|---|
| instanceOf |
United States Supreme Court case
ⓘ
class action securities fraud case ⓘ securities law case ⓘ |
| appliesTo |
open and developed securities markets
ⓘ
publicly traded securities ⓘ |
| category |
United States Supreme Court cases of the Rehnquist Court
ⓘ
United States Supreme Court cases on securities law ⓘ |
| citation | 485 U.S. 224 ⓘ |
| country |
United States of America
ⓘ
surface form:
United States
|
| court | Supreme Court of the United States ⓘ |
| decisionDate |
1988
ⓘ
March 7, 1988 ⓘ |
| docketNumber | 86-279 ⓘ |
| holding |
adopted the fraud-on-the-market theory for securities fraud class actions
ⓘ
materiality of merger discussions depends on probability and magnitude ⓘ presumption of reliance is available to plaintiffs in an efficient market ⓘ rejected a bright-line rule that preliminary merger discussions are immaterial as a matter of law ⓘ |
| influencedCase |
Amgen Inc. v. Connecticut Retirement Plans and Trust Funds
NERFINISHED
ⓘ
Erica P. John Fund, Inc. v. Halliburton Co. NERFINISHED ⓘ Halliburton Co. v. Erica P. John Fund, Inc. NERFINISHED ⓘ |
| issue |
whether preliminary merger negotiations must be disclosed under federal securities laws
ⓘ
whether reliance can be presumed in securities fraud class actions based on market price ⓘ |
| jurisdiction | federal question jurisdiction ⓘ |
| keyQuestion |
what constitutes a material misrepresentation or omission in the context of merger negotiations
ⓘ
whether market price can serve as a proxy for investor reliance ⓘ |
| language | English ⓘ |
| legalArea |
class actions
ⓘ
federal securities fraud ⓘ securities regulation ⓘ |
| legalDoctrine |
fraud-on-the-market theory
ⓘ
presumption of reliance in open and developed securities markets ⓘ probability-magnitude test for materiality ⓘ |
| majorityOpinionBy | Justice Harry A. Blackmun NERFINISHED ⓘ |
| materialityStandard | probability-magnitude balancing test ⓘ |
| petitioner | Basic Incorporated NERFINISHED ⓘ |
| relatesToConcept |
class certification in securities cases
ⓘ
efficient capital market hypothesis ⓘ materiality in securities fraud ⓘ |
| respondent | Max L. Levinson NERFINISHED ⓘ |
| result | judgment of the Court of Appeals affirmed in part and reversed in part ⓘ |
| statuteInterpreted |
SEC Rule 10b-5
NERFINISHED
ⓘ
Section 10(b) of the Securities Exchange Act of 1934 NERFINISHED ⓘ Securities Exchange Act of 1934 NERFINISHED ⓘ |
| subsequentHistory | followed and applied in numerous federal securities fraud class actions ⓘ |
| term | 1987 Term ⓘ |
| vote | 6-3 decision ⓘ |
| yearArgued | 1987 ⓘ |
Referenced by (1)
Full triples — surface form annotated when it differs from this entity's canonical label.