The Seventh Circuit upheld a summary judgment on federal securities fraud claims because, the court concluded, the plaintiffs didn’t present evidence of a causal connection between defendants’ deceptions and plaintiffs’ losses. The court pointed to the lack of proof that the market price of the stock in question dropped soon after the market learned of the company’s true financial condition. Ray v. Citigroup Global Markets, Inc., No. 05-4362 (7th Cir. Apr. 12, 2007).
The decision follows Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 342 (2005), in which the Court clarified the "loss causation" element of securities fraud under the Securities and Exchange Act of 1934 and SEC Rule 10b-5.