West v. Prudential Securities, Inc.
United States Court of Appeals for the Seventh Circuit
282 F.3d 935 (7th Cir. 2002)
James Hofman, a stockbroker for Prudential Securities, Inc. (Prudential) (defendant), privately told 11 of his customers that Jefferson Savings Bancorp (Jefferson) would definitely be acquired by another entity in the near future. In fact, Hofman was lying as there was no impending acquisition. The plaintiffs brought a class action suit against Prudential for securities fraud. The district court certified the plaintiffs’ class as everyone who bought Jefferson stock during the time that Hofman was lying about the acquisition, basing its decision on the fraud-on-the-market theory. Prudential filed an interlocutory appeal on the class certification issue.
Rule of Law
Holding and Reasoning (Easterbrook, J.)