- MR. BOIES: You could, Your Honor, and with respect to December 7th, I think that would not be so difficult. But there are nine dates and with respect to five of those nine dates when there was news revealed, they claim confounding factors. So what you have to do is you have to separate out the confounding factors, the allegedly confounding factors, with respect to each one of those dates, and you've got to do a detailed event study and in addition--
- JUSTICE KENNEDY: For each one of--of--
- MR. BOIES: For each for--each day--
- JUSTICE KENNEDY: --Oh, each day--
- MR. BOIES: --you've got to look at what the confounding factors are and you have to try to separate them. That's very complicated. It takes a lot of time. It's very expensive. It's a lot of expert testimony. It is why these things, for example, at the summary judgment stage, are very complicated. Now, an event study that demonstrates the efficiency of the market is far simpler. Halliburton conceded the efficiency of this market. This is not a case in which there is any doubt about the efficiency of the market. Halliburton has repeatedly conceded the efficiency of this market. And I think that when you are trying to prove market efficiency, all you have to do is demonstrate that the basic premise that generally markets take into account, well developed markets, take into account publicly available news, and you can do that relatively simply. Trying to separate out all of the factors that you need to separate out in order to determine whether a culpable misrepresentation was the cause of a price change and how much of that price change was due to that culpable information is very complicated. All of that will add cost and complication.
Nonetheless, the Respondent received a boost on this issue from the Government. The Government seemed to suggest that requiring event studies at the class certification stage would not be a big deal. Indeed, it was described as a "net gain" to investors.
- JUSTICE KENNEDY: Can you get to part two of Justice Kagan's question? Which is what is your view of the of the consequences if we adopt the law professors' view?
- MR. STEWART: I understand the law professors, there were a few law professors' briefs. I understand the one you're referring to be the one that basically advocated a shift away from analyzing the general efficiency of the market and focusing only on the effect or lack of effect on the the particular stock. I don't think that the consequences would be nearly so dramatic. In fact if anything, that would be a net gain to plaintiffs, because plaintiffs already have to prove price impact at the end of the day.
The discussion did not address how to show that an omission affected share prices. That can presumably be demonstrated at the time of corrective disclosure when the market learned the truth. But what about ab initio? The brief suggesting that event studies should be used focused on misrepresentations. See Amicus Brief of Law Professors, at 28 ("Event studies can examine market effects of particular affirmative misstatements by looking to the effect at the time of disclosure; in cases involving omissions, they can look to the date the information was corrected.").