The challenge of calculating damages in securities litigation is often compounded by the phenomenon of investors that have accrued both gains and losses as a result of the defendant company’s same fraudulent misrepresentations. This Note traces the opposing damages approaches and accounting methods courts have adopted in these instances to the dual origins and objectives of the Rule 10b-5 private right of action. Underscoring the shortcomings in these damages calculations founded predominantly upon either deterrent or compensatory grounds, this Note instead strives for a measure that not only balances both imperative ends but also yields a more sensible and equitable outcome. Namely, this Note proposes that losses should only be offset by gains when they are sufficiently linked by an ongoing trading strategy, and that matching sales of securities with the latest purchases will most clearly reflect gains and losses during the class period.
Meet Two-Face: The Dualististic Rule 10b-5 and the Quandry of Offsetting Losses by Gains,
77 Fordham L. Rev. 3045
Available at: https://ir.lawnet.fordham.edu/flr/vol77/iss6/5