Last Wednesday, the Ninth Circuit issued an important decision in Mineworkers' Pension Scheme et al. v. First Solar Inc. that serves to protect investor rights in securities class actions and will prevent companies that commit fraud from evading liability for their wrongdoing.
In the typical securities fraud case, an investor seeks to recover losses due to the revelation of a fraud that causes a drop in the company’s stock price. In order to plead (and ultimately prove) that a company committed securities fraud, plaintiffs must show that the stock drop that caused their losses was related to the fraud perpetrated by the company. For many years, courts in the Ninth Circuit split as to how that causal connection could be shown.
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