Posted by A.C. Pritchard (University of Michigan) and Robert B. Thompson (Georgetown University), on Thursday, April 5, 2018
Editor's Note: Adam C. Pritchard is the Frances and George Skestos Professor of Law at University of Michigan Law School and Robert B. Thompson is Peter P. Weidenbruch, Jr. Professor of Business Law at Georgetown University Law Center. This post is based on their recent paper.
Corporate liability for market misrepresentations under Rule 10b-5, the staple of today’s class actions, first took root in the 1960s. Our paper, Texas Gulf Sulphur and the Genesis of Corporate Liability under Rule 10b-5, shows the initial judicial efforts, occurring in the iconic Texas Gulf Sulphur case, to grapple with the extensive corporate liability for material misstatements affecting shares traded in public markets. Texas Gulf Sulphur is mostly known today for transforming insider trading law, but the judges of the Second Circuit hearing that case struggled more with the question of corporate liability.