Proving Economic Loss for In-And-Out Traders in Light of First Solar

Federal courts have grappled with the issue of whether or not to include in-and-out traders in federal securities class action lawsuits. One set of courts has excluded in-and-out traders on the grounds that they could not prove loss causation, while another set of courts has included in-and-out traders because of the possibility that they could prove that they had suffered a loss. In Mineworker’s Pension Scheme versus First Solar, Inc., the Ninth Circuit recently addressed what should be the correct standard for loss causation. While the Ninth Circuit’s decision resolved its own intra-circuit split, the Court’s decision widened an already existing circuit split. Where some circuits have adopted a restrictive view of loss causation that requires a corrective disclosure revealing the fraud, the Ninth Circuit adopted the view of loss causation that requires a corrective disclosure revealing the fraud, the Ninth Circuit adopted the view that loss causation only requires that plaintiff’s economic loss be proximately caused by a defendant’s misstatement. By embracing the Ninth Circuit’s standard, this note argues that in-and-out traders can show economic loss in the absence of any corrective disclosures. Through proximate cause’s intervening event pattern, it can be shown that an in-and-out trader has suffered a loss in the absence of a disclosure, obviating the need to show that a corrective statement was issued to the market