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Fraud-On-The-Market Doctrine In a Securities-Fraud Suit, Plus Indiana's Judicial Code of Conduct & Criminal Matter

By FindLaw Staff on August 20, 2010 | Last updated on March 21, 2019

US v. Lee, 09-2698, concerned a challenge to the district court's conviction of defendant for drug related crimes.  In affirmin the conviction, the court held that, assuming arguendo that the district court's denial of defendant's motion to suppress his incriminating statements amounted to a violation of his constitutional rights, such an error was harmless beyond a reasonable doubt.  Further, the district court did not violate defendant's constitutional rights.


Schleicher v. Wendt, 09-2154, concerned a challenge to the district court's conclusion that investors can use the fraud-on-the-market doctrine as a replacement for person-specific proof of reliance and causation in granting the class certification, in a securities-fraud suit against some managers of a large, publicly traded financial-services holding company.  In affirming, the court held that the district court assured itself that the market for the company's stock was thick enough to transmit defendants' statements to investors by way of the price, and as such, the district court did not commit a legal error, or abuse of discretion, in deciding that the fraud-on-the-market doctrine should not be conscripted to serve some other function.

Bauer v. Shepard, 09-2963, involved plaintiffs' challenge to certain provisions of the Indiana Code of Judicial Conduct, claiming that they refrain from speaking about controversial issues such as abortion or from filling out questionnaires about abortion sent by the Indiana Right to Life, Inc., because they fear the prospect of sanctions under the Code.  In affirming the district court's holding that all of the contested provisions are constitutional, the court  held that district court's judgment that a plaintiff's challenge to the pre-2009 Code became moot is modified as it is unripe.  The court held that the fundraising provisions are constitutional, as well as the partisan-activities provisions.  The "commits clauses" provisions are not overbroad, and the recusal clause does not present a constitutional issue at all.

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