In a 6-3 decision in February, the Supreme Court ruled for investors in the class-action case Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11- 1085. The question in the case was whether plaintiffs in securities fraud cases should be required to prove that the defendant had made a material misstatement before a class action may be certified.

Material information, the court has explained, is the sort of thing that reasonable investors would believe significantly alters the total mix of available information.

The court has also said that materiality may be presumed when a company makes public statements in an efficient securities market, or a market that reflects all publicly available information about a company. That presumption is known as the “fraud on the market” theory.

Justice Ruth Bader Ginsburg, writing for the majority, said the plaintiffs’ assertion was enough for purposes of class certification because the question at that stage was merely whether, in the words of the relevant rule of civil procedure, “questions of law or fact common to class members predominate over any questions affecting only individual members.”

Several of the concurring and dissenting Justices stated, however, that it may be time to reconsider the “fraud on the market” theory in light of research suggesting that it may sometimes rest on a faulty premise. Without the “fraud on the market” presumption, securities fraud class actions would face a near-certain death.