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Law360 Guest Article: Case Study: Hubbard V. BankAtlantic
Daniel H. Gold, Richard Guiltinan
On July 23, the Eleventh Circuit Court of Appeals rejected an expert witness’s event study as insufficient to demonstrate loss causation at trial in a securities fraud class action. In Hubbard v. BankAtlantic Bancorp Inc., No. 11-12410 (11th Cir. July 23, 2012), the court affirmed the trial court’s decision in favor of the defendants because the plaintiffs’ expert testimony did not sufficiently isolate the effects of the alleged fraud on the company’s stock price.
The BankAtlantic case adds to a growing line of precedent establishing the rigors of the loss causation standard, which requires shareholder plaintiffs in a securities fraud class action to prove that the alleged fraud caused the stock price declines identified by plaintiffs as their losses. The case also shows that conducting an event study does not necessarily fulfill plaintiffs’ burden of differentiating between those losses allegedly caused by fraud and those caused by unrelated market and industry factors.Excerpted from Law360, August 2, 2012. To view full article, click here (subscription required).