fraud on the market principle
fraud-on-the-market principle. Securities. The doctrine that, in a claim under the antifraud provisions of the federal securities laws, a plaintiff may presumptively establish reliance on a misstatement about a security’s value — without proving actual knowledge of the fraudulent statement — if the stock is purchased in an open and developed securities market. • This doctrine recognizes that the market price of an issuer’s stock reflects all available public information. The presumption is rebuttable. — Also termed fraud-on-the-market theory. See fraud on the market under FRAUD. [Cases: Securities Regulation 60.25. C.J.S. Securities Regulation §§ 214, 226–227.]
