Basic Inc. v. Levinson (1988): Suing for Lies You Never Heard | Bar Exam Audio

Basic Inc. v. Levinson (1988) — how the Supreme Court created the fraud-on-the-market theory, letting investors sue under Rule 10b-5 for corporate lies they never personally heard. In an efficient market the stock price reflects public misstatements, so reliance is presumed — rebuttably. Materiality means a substantial likelihood a reasonable shareholder would consider the fact important. A high-yield bar exam case brief: facts, issue, holding, and the black-letter rule, explained in plain English.