The Court of Appeals for the Seventh Circuit last week reversed a $2.46 billion judgment in a long-running securities-fraud class action against Household International and granted a new trial on limited issues. The opinion in Glickenhaus & Co. v. Household International, Inc. 2015 WL 2408028 (7th Cir. May 21, 2015), provides a sophisticated analysis of events studies and loss causation and brings further clarity to what it means to “make” a false statement under the federal securities laws.
The case, which was filed 2002, alleged that Household and three of its top executives committed securities fraud by misrepresenting Household’s lending practices, delinquency rates, and earnings from credit-card agreements. Those misrepresentations purportedly inflated Household’s stock price during the relevant period.