FRAUD-ON-THE-MARKET PRINCIPLE

fraud-on-the-market principle.Securities. The doctrine that, in a claim under the antifraud

provisions of the federal securities laws, a plaintiff may presumptively establish reliance on a

misstatement about a security’s value — without proving actual knowledge of the fraudulent

statement — if the stock is purchased in an open and developed securities market. • This doctrine

recognizes that the market price of an issuer’s stock reflects all available public information. The

presumption is rebuttable. — Also termed fraud-on-the-market theory. See fraud on the market

under FRAUD. [Cases: Securities Regulation 60.25. C.J.S. Securities Regulation §§ 214,

226–227.][Blacks Law 8th]