A shareholder of a public company moved the Court to approve a class action, contending that the misleading reports regarding experiments held by the company led to inflation of share price and the share price plummeted after the failure of the experiment.
The Court rejected the motion and held that public investors are conducting transactions in securities based on the company's reports and thus the market price of the share reflects the information disbursed to the public. However, in this case the drop in the share price resulted from the failure of the experiment and later reports that also had an impact on the share price. Because the shareholder did not prove the existence of a connection between the misleading report and the damage claimed, the motion was rejected.