Ho, Ho, Ho, Who’s Laughing Now?

Seriously, what would possibly possess you to tell the judge that your opponents’ argument is “laughable” and “nonsensical?” O.K., it’s understandable if you’re John Payne conducting an important holiday sanity hearing, but otherwise this type of invective is more likely to get you an order like this one. In this instance, it was Plaintiffs in the Jasmine securities class action who ridiculed Defendants' summary judgment position that “there can be no loss causation absent disclosure of the fraud.” Judge Robert B. Kugler (D.N.J.) sure didn’t find it funny, as he ruled that “because the market can only react to news when it is revealed, the price of Jasmine's stock could not have fallen as a result of the misrepresentations unless the market knew about the misrepresentations - that is, unless the Misrepresentations had directly or indirectly been disclosed to the market.” As a result, he found Plaintiffs' argument “unpersuasive,” as “loss causation requires disclosure.”

You can read McKown v. Jasmine, issued June 30, 2005, at 2005 U.S. Dist. LEXIS 32164.

Nugget: “Although the plaintiffs now argue that the market can correct a stock price before investors receive notice of the relevant information, there can be no loss causation absent disclosure of the fraud to the market.”