Emory Corporate Governance and Accountability Review


Jonathan Massey


On March 5, 2014, the Supreme Court heard argument in one of the most important securities law cases in decades: Halliburton Co. v. Erica P. John Fund, No. 13-317. Halliburton urged the court to overturn the landmark case Basic Inc. v. Levinson and in turn, the 'fraud-on-the-market' presumption. This piece argues in favor of denying Halliburton's request and maintaining the presumption. First, Jonathan Massey argues that the congress should address this issue instead of the Court. If the Court does decide to take this issue, stare decisis should prevail. Furthermore, since Basic was decided in 1988, institutional investors have utilized passive investment strategies that rely on 'fraud-on-the-market' presumption. Finally, private and class action lawsuits act as a useful enforcement tools to prevent fraud where the SEC does not have resources to prosecute.