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52 U. Louisville L. Rev. 529 (2014)
Fraud Created the Market: A Presumption Without Basis
Billy Hopkins*

The story of Jim and Bob is largely based on the landmark case adopting FCTM, Shores v. Sklar.21 Ironically, instead of supporting FCTM as a valid presumption, these facts provide a strong argument against it. This Note will expand on that argument, among others, in calling for a universal rejection of FCTM. Part II will provide background information regarding a private claim under Rule 10b-5 and discuss the emergence of presumed reliance. Part III will explore the development of FCTM, assessing its various standards of application as well as the circuit split that currently exists. Finally, Part IV will demonstrate that FCTM has not been properly supported as a valid legal presumption, and the federal circuits that have adopted it nonetheless have failed to develop a workable standard of application. Moreover, Part IV will contend that a widespread acceptance of FCTM would detrimentally redefine the concept of a “reasonable investor” as it pertains to materiality.

* J.D. Candidate, May 2014, Louis D. Brandeis School of Law, University of Louisville. Special thanks to my wife, Andrea, for her support throughout law school.