Know Your Meme: Fifth Circuit Overturns Class Certification in Securities Fraud Action for Failing to Determine if Stock Traded in Inefficient Market as a Meme Stock

Know Your Meme: Fifth Circuit Overturns Class Certification in Securities Fraud Action for Failing to Determine if Stock Traded in Inefficient Market as a Meme Stock

In securities fraud class actions, plaintiffs must prove that a stock was traded in an efficient market in order to invoke a presumption that—under the fraud-on-the-market theory articulated in Basic Inc. v. Levinson, 485 U.S. 224, 247 (1988)—issues of reliance on defendant’s misrepresentation predominate. But if a stock is traded in an inefficient market, then...