The Circuit

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The Ninth Circuit recently ruled that a company announcement of an internal investigation is insufficient to establish a loss causation theory in a securities fraud action under section 10(b) of the Exchange Act. Specifically, it stated that an announcement of an investigation is not a corrective disclosure—an event that discloses a company’s fraud. This Comment argues courts should apply a rebuttable presumption that broadens the definition of corrective disclosure to include announcements of these investigations. This Comment concludes that, unlike the Ninth Circuit’s narrow definition of corrective disclosure, the rebuttable presumption framework would allow investors the opportunity to be fully compensated for their losses in securities fraud actions.



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