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Client Alert: ‘Fraud On The Market’ Theory In Australia?


Generally it has been thought that in order for a shareholder or class of shareholders to succeed in a securities action against a company, it or they must essentially prove that it or they:

  • relied upon company’s  allegedly fraudulent conduct in purchasing or selling securities, and 
  • that the company’s conduct caused, at least in part, it/their loss.

These two elements are known in the United States, respectively, as “transaction causation” and “loss causation”.

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