Brattle Consultants Analyze Role of Event Study Analysis Post-Halliburton II in a Recent Securities Regulation Law Journal Article
Published in the Securities Regulation Law Journal
In a recent article for the Securities Regulation Law Journal, Brattle consultants discuss the role of event studies in rebuttals, presenting findings based on a survey of 138 federal court opinions following Halliburton II through September 2022. The authors’ review indicates that the courts have demonstrated an appetite to see price impact refuted by affirmative statistical evidence that is directly inconsistent with the notion that the information at issue impacted the market price.
In its 2014 Halliburton II decision, the US Supreme Court ruled that defendants in securities class actions can rebut the presumption of reliance – and, in turn, overturn claims – if it can be proven that alleged misrepresentations have no material adverse effect on stock prices. However, if defendants fail to provide an appropriate event study analysis to address the complexities of confounding factors and other contextual details, this may result in unsuccessful challenges. In fact, they found that defendants failed to rebut the presumption of reliance over 90% of the time when attempting to show a lack of price impact without their own event study.
The article, “When Traditional Event Study Is Not Sufficient to Rebut the Basic Presumption of Resilience: A Survey of Federal Court Opinions Following Halliburton II,” is coauthored by Brattle President & Principal Dr. Torben Voetmann, Associates Dean Pender and Warren Darakananda, and Senior Research Analyst Timothy O’Gallagher.
