Measuring Business Interruption Losses and Other Commercial Damages, 3rd Edition

CHAPTER 10Securities‐Related Damages

In the wake of the booming stock market of the 1990s and its subsequent collapse, a large volume of lawsuits ensued. Some were motivated by large‐scale scandals, such as Enron, WorldCom, and Global Crossing. Others were caused by the large losses some investors incurred in their portfolios. In 2003, the industry was experiencing a “tidal wave” of arbitration cases.¹ Such a volume of securities lawsuits expands the need for finance experts to analyze allegations of damages. The market underwent a prodigious collapse in 2020 after a decade long bull market. It is not clear at this time to what extent this coronavirus‐related collapse may also result in a volume of securities lawsuits.

Key Securities Laws

The two main securities laws in the United States are the Securities Act of 1933 and the Securities Exchange Act of 1934. Conceived during the Great Depression and after the stock market crash of October 1929, these laws were designed to regulate securities markets through mandated disclosure of more accurate, verified financial information and through the prevention of improper activities.

Securities Act of 1933

This law states registration and distribution requirements for public issuers of securities. Companies that issue securities to the public are required to disclose accurate information in their filings and other communications to shareholders. The dissemination of information known to be inaccurate can give rise to a cause of actions ...