Searching for Market Efficiency

This Comment is a response to Professor Donald Langevoort’s Article, Judgment Day for Fraud-on-the-Market: Reflections on Amgen and the Second Coming of Halliburton, and Professor Geoffrey Miller’s Article, The Problem of Reliance in Securities Fraud Class Actions, both of which offer reactions to, and interpretations of, the Supreme Court’s recent decision in Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014).As their analyses highlight, the fundamental difficulty of the fraud-on-the-market doctrine is its fuzziness around the edges — there are few guideposts for how broadly or narrowly it should apply. Until now, courts have dealt with this fuzziness by adopting an extremely narrow definition of market efficiency. Halliburton, however, appears to alter the balance by broadening the concept of market efficiency, while simultaneously permitting district courts to police the application of the fraud-on-the-market doctrine on a case-by-case basis. It remains to be seen how much Halliburton will change the legal landscape, but what is certainly true is that district courts will continue to search for ways to cabin the doctrine’s potential scope.