Rolling Disclosure Cap Method May Lead To Lower Damages

By Mark Howrey, Eric Korman and Emma Dong (July 28, 2021, 5:36 PM EDT) -- The Private Securities Litigation Reform Act established a cap on damages in cases brought under Section 10(b) of the Securities Exchange Act and Rule 10b-5.[1]

Historically, plaintiffs have typically calculated damages assuming this damages cap applies only to shares that are held through the final corrective disclosure in the class period, even if multiple corrective disclosures are alleged.

However, the U.S. District Court for the Northern District of California called into question that approach in the Zoom Securities Litigation.[2] When determining which of two potential investor lead plaintiffs had a greater financial interest in the litigation, the court applied the cap...

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