Blawgletter®

Flimsy Opinions and Securities Fraud

False opinions

Giving a knowingly false opinion about a public company can expose the company and its insiders to liability for securities fraud under federal law.

But what about an opinion that they truly believe but for which they have a flimsy basis?

The Supreme Court held today that the lack of rigor may indeed support a claim under the Securities Act of 1933, 15 U.S.C. 77k(a), in spite of the opinion-giver's earnestness.

Omnicare's belief

The case arose from a public stock offering by Omnicare, Inc., a company that provided pharmacy services for people who reside in nursing homes. Omnicare said in the registration statement that it "believe[d]" it complied with relevant law. The belief proved untrue; Omnicare's rebates to pharmacies did violate federal law against paying kickbacks.

Pension funds that bought Omnicare stock in the initial public offering sued under section 11 of the Securities Act after lawsuits by the federal government undercut Omnicare's claim of legal compliance. The district court dismissed the case, but the Sixth Circuit reversed, holding "that a statement of opinion that is ultimately found incorrect -- even if believed at the time made -- may count as count as an 'untrue statement of material fact.'" Omnicare, Inc. v. Laborers Dist. Council Constr. Industry Pension Fund, No. 14-435, slip op. at 6 (U.S. Mar. 24, 2015) (quoting 15 U.S.C. 77k(a)).

Facts and opinions

The Court ruled 9-0 that the court of appeals erred in concluding that Omnicare had made an "untrue statement of material fact". While "a statement of fact ('the coffee is hot') expresses certainty about a thing," "a statement of opinion ('I think the coffee is hot') does not." Id. Because Ominicare said only that it "believe[d]" its rebates didn't violate anti-kickback law and the pension funds "do not contest that Omincare's opinion was honestly held", the statement -- of a false but sincere view -- did not run afoul of the Securities Act, all nine justices agreed. Id. at 9. "[A] sincere statement of pure opinion is not an 'untrue statement of material fact,' regardless whether an investor can ultimately prove the belief wrong." Id.

That left the question of whether the funds had alleged a viable claim that "Omnicare 'omitted to state facts necessary' to make its opinion on legal compliance 'not misleading.'" Id. at 10 (quoting 15 U.S.C. 77k(a)). Seven of the justices concluded that the funds deserved a chance to persuade the courts below that they had stated an adequate omission claim.

The majority pointed out that "a reasonable investor may, depending on the circumstances, understand an opinion statement to convey facts about how the speaker has formed the opinion—or, otherwise put, about the speaker’s basis for holding that view." Id. at 11. Justice Kagan explained:

Section 11’s omissions clause, as applied to statements of both opinion and fact, necessarily brings the reasonable person into the analysis, and asks what she would naturally understand a statement to convey beyond its literal meaning. And for expressions of opinion, that means considering the foundation she would expect an issuer to have before making the statement. 

Id. at 17. The Court sent the case back to the Sixth Circuit for analysis of whether the pension funds' complaint adequately stated an omissions claim.

Concurrences

Justices Antonin Scalia and Clarence Thomas concurred in separate opinions. Justice Scalia wrote that section 11 does not apply to omissions about the basis for opinions unless the opiner "intend[ed] to deceive" by failing to disclose the flimsiness of the basis. Id. at 6 (Scalia, J., concurring). Justice Thomas felt that the question of liability for an omission "is not properly before us" since the courts below had not passed on it. Id.  at 1 (Thomas, J., concurring).

Upshot

Omnicare offers more to plaintiffs than to defendants, for two main reasons. First, the mere fact that a public disclosure expresses or relates to an opinion will not preclude liability. Section 11 covers not only lying about an opinion -- saying you believe something when you don't -- but also falsely implying that an opinion rests on a reasonably rigorous basis -- suggesting that adequate expertise and a sufficient investigation support it.

Second, the Court's ruling saves Securities Act claims from the challenges of pleading a claim under the onerous standards of the Private Securities Litigation Reform Act of 1995. Justice Scalia would have imported scienter into the section 11 analysis despite its absence as an element under the Securities Act, but the majority rejected that approach. Id. at 15 n.11 (stating that "we think Justice Scalia's reliance on the common law’s requirement of an intent to deceive is inconsistent with §11’s standard of liability").

The Court's decision will give new life to securities cases that target false statements about legal and other opinions. Plaintiffs may want to rejoice.

In Blawgletter's opinion.

Note: Our series on the hottest oil and gas claims will resume tomorrow.

Loss Due to Lack of Loss Causation Wins Appeal; Error Caused Ruling, Fifth Circuit Says

Plaintiffs win a rare Fifth Circuit victory

If you represent a client who bought a stock that shed value more and more as bad news about the company trickled out, you can take courage from a rare pro-plaintiff decision by the Fifth Circuit. The court reversed the dismissal of a securities fraud class action on a tricky issue in such cases -- the element of "loss causation".

The appeals court panel held that a class of investors in Amedysis -- which "provides home health services to patients with chronic health problems" -- could take their securities fraud case beyond the motion to dismiss stage. Public Employees' Retirement Sys. of Mississippi v. Amedisys, Inc., No. 13-30580 (5th Cir. Oct. 2, 2014).

Loss causation -- huh?

The district court in Baton Rouge had thrown out the complaint on the ground that it failed to plead a plausible basis for the "loss causation" element of their claim.

Loss causation means, in essence, that false information about a company inflated the market price of a stock or other security and caused investors to overpay for the security. Proving it generally requires evidence showing that the post-purchase public airing of "corrective disclosures" about the company coincided with a drop in the market price of security.

Amedisys shareholders alleged that the company and company insiders hid the fact that it regularly engaged in fraudulently claiming reimbursement from Medicaid, grossly inflating its earnings beyond a sustainable amount. The district court thought that the public airing in dribs and drabs of the truth about Amedisys's crooked ways did not count as "corrective disclosure" of the true facts regarding those crooked ways.

Fifth Circuit decision

Citing the Supreme Court's ruling on loss causation in Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005), the court of appeals held:

According to the Complaint, Defendants made materially false and misleading statements about their compliance to artificially inflate the price of Amedisys securities throughout the Class Period. Once Amedisys was placed under the spotlight of government scrutiny for Medicare fraud, its earnings dropped significantly because its employees could no longer continue exploiting Medicare reimbursements. After each negative partial disclosure, Defendants attempted to mitigate the impact of those disclosures by making contemporaneous misstatements to the market and prevented the full truth from being revealed at once. As a result, PERSM and the other Class members purchased Amedisys securities at artificially inflated prices and suffered economic loss when the artificial inflation dissipated and the price of these securities declined in response to the series of partial disclosures revealing the true nature of Amedisys’s business practices.

Taking the above facts as true, the 2008 Citron Report, the Swartz and Graham resignations, the 2010 WSJ Article and the above governmental investigations, coupled with Amedisys’s second quarter 2010 earnings report, collectively constitute and culminate in a corrective disclosure that adequately pleads loss causation for purposes of a Rule 12(b)(6) analysis. This holding can best be understood by simply observing that the whole is greater than the sum of its parts. The district court erred in imposing an overly rigid rule that government investigations can never constitute a corrective disclosure in the absence of a discovery of actual fraud.4 5 “To require, in all circumstances, a conclusive government finding of fraud merely to plead loss causation would effectively reward defendants who are able to successfully conceal their fraudulent activities by shielding them from civil suit.” In re Questcor Sec. Litig., No. SA CV 12-01623[,] 2013 WL 5486762[,] at *22 (C.D. Cal Oct. 1, 2013). Indeed, “there is no requirement that a corrective disclosure take a particular form or be of a particular quality . . . It is the exposure of the fraudulent representation that is the critical component of loss causation.” In re Bristol Meyers Squibb Co. Sec. Litig., 586 F. Supp. 2d 148, 165 (S.D.N.Y. 2008) (citations and internal quotation marks omitted). Accordingly, when this series of events is viewed together and within the context of Amedisys's poor second quarter 2010 earnings, it is plausible that the market, which was once unaware of Amedisys's alleged Medicare fraud, had become aware of the fraud and incorporated that information into the price of Amedisys's stock.

A motion to dismiss challenges the adequacy of the initial pleading. To plead loss causation in a private securities action, the complaint need only allege facts that support an inference that the Defendants’ misstatements and omissions concealed the circumstances that bear upon the loss suffered such that Plaintiffs would have been spared all or an ascertainable portion of that loss absent the fraud. Lentell, 396 F.3d at 175. Whether the connection between Amedisys’s misleading statements and the alleged corrective disclosures may ultimately be found too attenuated at a later stage in litigation is a highly fact intensive inquiry that need not be reached at this point. The Complaint consists of over 200 pages of allegations regarding, among other things, Defendants’ fraudulent Medicare billing practices. Where the Complaint sets forth specific allegations of a series of partial corrective disclosures, joined with the subsequent fall in Amedisys stock value, and in the absence of any other contravening negative event, the plaintiffs have complied with Dura’s analysis of loss causation.

Id. at 16-19.

Teaching

Amedisys teaches how to plead loss causation in cases where the truth comes out gradually and that plaintiffs should now despair a bit less about bringing securities fraud cases within the Louisiana-Mississippi-Texas area over which the Fifth Circuit presides.

Workers Catch a Break on Some ERISA Claims

A June 25th ruling by the Supreme Court cleared the way for workers to bring claims under the Employee Retirement Income Secuirity Act of 1974 against ERISA plan fiduciaries who imprudently allow or require the employees to invest in their employers' stock. But the window of liability for imprudent fiduciaries might not last very long -- perhaps less than a quarterly reporting period.

Matching with stock

The decision came in the context of a public employer, First Third Bancorp, that -- like many other public companies -- matched its employees' voluntary contributions to their 401(k) plans but only with company stock in First Third's employee stock-ownership plan or ESOP.

Investing in company stock creates problems for the 401(k) plan beneficiaries when the company's stock becomes a bad investment. A drop in the stock's market price can badly deplete their nest eggs. But plan fiduciaries, who usually occupy high executive positions with the employer, have powerful incentives to keep the bad news from the shareholders, including the 401(k) plan participants.

Presuming prudence

A majority of federal courts compounded the difficulty by absolving plan fiduciaries of blame even though they knew the stock was in trouble yet continued to allow or require plan participants to own the stock. These courts did so by raising a "presumption of prudence". The presumption protected their decision to buy or hold overvalued company stock unless plan beneficiaries could "make a showing that would not be required in an ordinary duty-of-prudence case, such as that the employer was on the brink of collapse." First Third Bancorp v. Dudenhoeffer, No. 12-751, slip op. at 1 (U.S. June 25, 2014).

Writing for a unanimous Court, Justice Stephen Breyer held that "no such presumption applies." Id. "ESOP fiduciaries are subject to the same duty of prudence that applies to ERISA fiduciaries in general," he wrote, adding the obvious point that the fiduciaries "need not diversify" the assets in the ESOP itself. Id. at 1-2.

Plausible claim?

The balance of the opinion dealt with whether the plaintiffs had stated a plausible claim under Twombly and Iqbal.

The Court had doubts. It pointed to the fact that, as insiders who had access to non-public information about the First Third's true financial condition, the ERISA plan fiduciaries couldn't use their insider knowledge for the benefit of plan participants without risking violation of laws against insider-trading. The Court also noted that  taking steps to halt investment in the ESOP could do more harm to the participants than good by prompting a sell-off of the company's shares, causing the value of the ESOP holdings to plummet. Id. at 18-20.

The Court remanded the case to the Sixth Circuit to sort out whether, in light of the concerns about insider trading and more-harm-than-good, the complaint stated a plausible imprudent investment claim.

Meeting the test

Can the plaintiffs overcome those hurdles?

The answer may turn on whether the fiduciaries could as a practical matter change how the plan sponsor deals with matching contributions and any holding requirement without affecting the market price of the stock. Presumably that could happen, but the fiduciaries would have to take care that they meanwhile complied with all disclosure obligations under applicable securities laws. As companies must report at least quarterly on their financial condition, the period over which an imprudence claim could extend may necessarily last fewer than three months.

Securities Class Actions Take Hit

Basic survives -- barely

The Supreme Court held today that plaintiffs in securities fraud cases may continue to use a 26-year-old presumption that "the price of stock traded in an efficient market reflects all public, material information -- including material misstatements." Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317, slip op. at 1 (U.S. June 23, 2014) (declining to overrule Basic Inc. v. Levinson, 485 U.S. 224 (1988).

But the Court went on to hold that defendants may "rebut the presumption of reliance with evidence of a lack of price impact" in order to defeat class certification. Id. at 16.

Votes

Chief Justice Roberts authored the majority opinion, in which Justices Breyer, Ginsburg, Kagan, Kennedy, and Sotomayor joined.

Justice Ginsburg, in concurrence, noted that "[a]dvancing price impact consideration from the merits stage to the certification stage may broaden the scope of discovery available at certification" but "should impose no heavy toll on securities-fraud plaintiffs with tenable claims." Id. concurrence at 1. Justices Breyer and Sotomayor joined her opinion.

Justice Thomas, also concurring, explained why he would overrule Basic. Justices Alito and Scalia agreed with him.

Consequences

Contrary to Justice Ginsburg's optimistic view, the Court's allowance of attacks on the presumption of reliance at the class certification stage will vastly increase the expense of litigating certification issues. Event studies and other analyses by experts will result in expenditures of hundreds of thousands if not millions of dollars.

The number of law firms that can afford to prosecute securities class actions will continue to shrink.

Securities fraud will become less risky and more profitable.

Second Circuit Okays SEC's No-Admit Pact with Citigroup

Investors who wished for a helping hand in pursuing claims against banks that sold them exotic debt instruments instead got a kick in the pants from the Second Circuit today.

No no-admit deals

In 2011, U.S. District Judge Jed Rakoff famously refused to approve a consent decree between the Securities and Exchange Commission and Citigroup. The pact concerned the financial behemoth's possibly fraudulent role in marketing and selling interests in a risky "fund". The "Fund’s assets . . . were primarily collateralized by subprime securities tied to the already faltering U.S. housing market." Securities and Exchange Comm'n v. Citigroup Global Markets, Inc., No. 11-5227, slip op. at 4 (2d Cir. June 4, 2014).

Judge Rakoff rejected the deal largely on the ground that Citigroup did not admit to facts that would support the injunctive relief to which it had agreed. He wrote:

An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous. The injunctive power of the judiciary is not a free‐roving remedy to be invoked at the whim of a regulatory agency, even with the consent of the regulated. If its deployment does not rest on facts—cold, hard, solid facts, established either by admissions or by trials—it serves no lawful or moral purpose and is simply an engine of oppression

Id. at 9 (quoting Securities and Exchange Comm'n v. Citigroup Global Markets, Inc., 827 F. Supp. 2d 328, 335 (S.D.N.Y. 2011)).

Appeals court vacates and remands

The Second Circuit vacated the ruling. It held that the district court abused its discretion by requiring that the record establish the "truth' about the allegations underlying the SEC's charges against Citigroup.

Investors and their lawyers should note the panel's view about a major reason that Citigroup did not want to concede it did something wrong -- the issue-preclusive (or, if you prefer old school, collateral estoppel) effect of the consent decree. " "Nor can the district court reject a consent decree on the ground that it fails to provide collateral estoppel assistance to private litigants—that simply is not the job of the courts." Id. at 27.

Winners and losers

With an admission of guilt by a Citigroup (or a Bank of America or a Credit Suisse or another financial institution), unhappy investors would not have to prove wrong-doing. They would mainly need to show that they bought a bad investment during the relevant time period and lost money on it.

The Second Circuit's decision paves the way for more no-admit settlements with the SEC. That is good news for banks, bad news for investors.

Wyly Jury Finds for SEC

A multi-week jury trial in the Southern District of New York ended today with a verdict for the Securities and Exchange Commission against Sam Wyly and the estate of his brother Charles Wyly Jr. The SEC alleged that the Wylys had used offshore trusts to make secret trades and that they received more than $550 million in profits as a result of the trades.

RICO Can Reach Across the Pond, Second Circuit Holds

Get ready, folks, for a new wave of cases under the Racketeer-Influenced and Corrupt Organizations Act of 1970 -- RICO, for short. The Second Circuit ruled this week that a case by the European Community and EC member states may proceed with a RICO case against RJR Nabisco for money laundering and worse. European Community v. RJR Nabisco, Inc., No. 11-2475-cv (2d  Cir. Apr. 23, 2014). Plaintiffs may now deploy RICO to reach conduct that occurs outside of the United States but that other laws cannot reach.

Morrison Presents No Barrier

The panel's decision reversed the district court's dismissal. The dismissal relied on the Supreme Court's sharp limitation of cases that attempt to apply federal law to conduct overseas. In Morrison v. Nat'l Australian Bank Ltd., 130 S. Ct. 2869 (2010), the Court upheld this ruling by the Second Circuit:

Something about a class of overseas people suing an Australian bank about securities fraud that emanated from the world's smallest continent.  They lost on subject matter grounds.  Seems the U.S. Securities Exchange Act doesn't reach so far.

See Morrison, 130 S. Ct. at ("When a statute gives no clear indication of an extraterritorial application, it has none.") (post here).

Some Predicate Act Statutes Say They Apply Overseas

The panel's reversal hinged on the fact that RICO deems violations of certain criminal statutes "predicate acts" and the fact that some of the predicate act statutes expressly allow extraterritorial application. The money laundering statute, for example, states that "[t]here is extraterritorial jurisdiction over the conduct prohibited by this section." 18 U.S.C. 1956(f). Because the EC plaintiffs alleged violations of that and other predicate act statutes that by their terms reach beyond our national borders, the largely European nature of the unlawful "enterprise" that engaged in the "pattern of racketeering activity" didn't matter. The panel held:

The claims of the Complaint asserting RICO liability for a pattern of violations of these predicates meet the statutory requirements for extraterritorial application of RICO. The district court erred in dismissing, as impermissibly extraterritorial, the RICO claims.

European Community, slip op. at 19 (foonote omitted).

Impact

Victims of foreign conduct that violates any of the dozens of statutes that RICO section 1961 defines as predicate act offenses will want to see whether the relevant statutes call for extraterritorial application. If they do, those victims will further want to look into whether the conduct overseas also satisfies the "enterprise", "pattern", and other requirements of RICO. That the victims suffered harm outside the United States may not matter under RICO. And for that reason RICO may have a rebirth of sorts.

Court to Decide If Class Actions Extend Deadline for Individual Securities Fraud Claims

The Supreme Court granted review on March 10 in a case that involves "American Pipe tolling" of limitations.

If that sounds unfamiliar, Blawgletter explained the underlying Second Circuit decision last year as follows:

If you have a claim under the Securities Act of 1933, you need to act promptly -- within one year after you knew or should have known you had a claim and within three years "after the security was bona fide offered to the public" or "more than three years after the sale of the security." 15 U.S.C. § 77m.

Note the "and". Even if you could not have learned that you had a basis for a claim within the three-year period, if you sue after the three years expire, you lose. And if you reasonably could have discovered the claim within the three years but wait more than a year to file suit, you lose as well.

But the Supreme Court carved out an exception to the running of limitations under federal law if someone else filed a class action that covered your claim. So long as the class claim remained pending, the Court held, the limitations period went dormant for you. It stopped running.

That gave you time to decide what to do. If a court granted class treatment of the case, you could either remain a member of the class or "opt out" of it and pursue your own claim, either individually or with a group of others. If the court denied class certification, you would have to file your own case if you wanted to pursue a recovery.

The doctrine for class action "tolling" goes under the name "American Pipe", after the case that created the concept. Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974). But Am. Pipe and its offspring left open a question, at least in the context of claims under the Securities Act. Does it apply both to the one-year period and the three-year one?

The Second Circuit held this week that American Pipe tolling exists only with respect to the shorter time frame. The panel based its ruling on the distinction between a "limitations" period -- which it deemed "procedural" -- and a "repose" period -- which it called "substantive". Congress enacted the three-year cut-off as a substantive deadline of "repose", thus making class members who sue within the one-year limitations period but beyond the repose due date unable to invoke American Pipe tolling. Police & Fire Retirement Sys. of the City of Detroit v. IndyMac MBS, Inc., No. 11-2998-cv(L) (2d Cir. June 27, 2013).

What does that mean to you, assuming you have a Securities Act claim? It means that you cannot count on a class action to extend your time for filing a claim. If you think you may want to opt out, you need to put the three-year deadline on your calendar and take action before the period expires.

Will the Second Circuit's ruling open the floodgates to opt-outs in Securities Act cases? It may in the context of people that have large claims. They will need to accelerate their decision-making on whether to opt out of a class case or stay in it. Because if they wait, they'll lose the flexibility they thought they had -- before now.

You can see Lyle Denniston's write up of the case on SCOTUSblog here and SCOTUSblog links relating to the case here.

Blawgletter suspects that the Court will reverse the Second Circuit's ruling. Why? Because the majority of the Court (a) dislikes class actions, (b) adores one-on-one fights between behemoths that can afford the hefty cost of individual justice, and (c) will feel a tickling sensation from holding that bad, terrible, horrible, and ugly class actions may prevent virtuous and wealthy holders of first amendment rights from suing right away and therefore should at least, for the love of God, toll limitations during the time until the ever-more-likely order denying, or reversing, class certification eventuates.

We'll see.

Outsiders May Blow Whistle on Fraud, Supreme Court Holds

The Sarbanes-Oxley Act came in the wake of Enron's sudden sinking. It aimed in part to foster the early blowing of whistles on fraud at "publicly traded" companies in order to avoid further titanic shipwrecks al-la the Greatest Company in the World's. The Act did so in part by barring retaliation against "an employee" who blew the whistle on fraudulent activity. But does the bar protect an "employee" whose whistle-blowing concerns not her own employer but a public company that engaged her firm as an independent contractor?

Yes, the Supreme Court held today in Lawson v. FMR LLC, No. 12-3 (U.S. Mar. 4, 2014).

The 6-3 Court thus ruled that Sarbanes-Oxley protected a whistle-blowing employee of a contractor that managed a publicly-traded but employee-free mutual fund for fraud by the mutual fund.

High Court Cuts Reach of SLUSA

Many lower courts have given the Securities Litigation Uniform Standards Act of 1998 a wide preemptive scope. In those courts, a black-hole-like SLUSA devours all cases that come within a light year of its omnivorous gullet. If a lawsuit said pretty much anything about buying or selling an interest in a company -- BAM! Into the back hole it went.

All that changed today. The U.S. Supreme Court held that a "covered security" means one that trades on a public market -- your NYSEs and your Nasdaqs, to name the two biggest ones. Because SLUSA applies only to "covered" securities, a complaint that alleges fraud in a purely private purchase or sale of a stock, bond, note, or other security falls beyond the reach SLUSA's inhalations. Chadbourne & Parke v. Troice, No. 12-79 (U.S. Feb. 26, 2014).

The Court thus agreed with an unusually cautious Fifth Circuit that a class of people who bought certificates of deposit from the bank that Texan Allen Stanford set up in Antigua could bring state-law claims against Stanford and his helpers. SLUSA did not preempt such claims, the panel held in reversing dismissal of cases that originated in federal court and order remand of cases that began in state court.

Justice Breyer wrote for the 7-2 Court. Chief Justice Roberts and Justices Scalia, Thomas, Ginsburg, Sotomayor, and Kagan joined in the opinion. Justice Kennedy dissented, as did Justice Alito, who signed onto the Kennedy dissent.

What does the decision portend, if anything, for the blockbuster case that the Court may use to weaken or even sweep away the "fraud-on-the-market" theory in securities class actions? The Court will hear that appeal, in Halliburton Co. v. Erica P. John Fund, No. 13-317 (U.S.), on March 5, 2014. The case presents two questions:

1. Whether this Court should overrule or substantially modify the holding of Basic Inc. v. Levinson, 485 U.S. 224 (1988), to the extent that it recognizes a presumption of classwide reliance derived from the fraud-on-the-market theory.

2. Whether, in a case where the plaintiff invokes the presumption of reliance to seek class certification, the defendant may rebut the presumption and prevent class certification by introducing evidence that the alleged misrepresentations did not distort the market price of its stock.

The fact that the plaintiffs in Chadbourne & Parke live to fight another day provides a Ray of Hope for their brethren and sisteren in the Halliburton case.

But what about the Kennedy dissent? He says that federal law alone should apply to just about any securities transaction and that the availability of state-law claims somehow weakens federal-law protections of investors. Having more grounds for relief is bad for investors, according to the dissent.

Does that imply a hostility to expansive private remedies for securities investors? Justice Kennedy (and Justice Scalia) sat on the Court that handed down Basic, Inc. v. Levinson but did not participate in the decision. During the argument in the Amgen case from last Term, Justice Kennedy said "24 years of economic scholarship -- I think that's how long it's been since Basic was decided -- has shown that the -- the efficient market theory is -- is really -- really an overgeneralization. It could be much more subtle than that". Which suggests skepticism.

What do you think?