Will Securities Class Actions Become an Endangered Species?

As the U.S. Supreme Court takes up the fraud-on-the-market theory underpinning most securities fraud class actions, the Wall Street Journal asks if this sort of class action will become an endangered species and if the "balance of power between companies and the lawyers who sue them" will be rebalanced.

Under the fraud-on-the-market theory, shareholders don't have to show a direct connection between the alleged fraud and their losses, WSJ reports. Instead, the theory is that stock proices reflect all relevant information, including fraudulent information.

Analysts predict that there may very well be five votes on the court to overturn 1988 precedent that approved the theory, WSJ also reports.