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Securities Fraud: Dura Pharmaceuticals, Inc. v. Broudo

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Publication Date: February 2005

Publisher(s): Library of Congress. Congressional Research Service

Series: RS22038

Topic: Law and ethics (Corporations and securities law)

Abstract:

On June 28, 2004, the United States Supreme Court granted certiorari in the case Dura Pharmaceuticals, Inc. v. Broudo, appealed from the United States Court of Appeals for the Ninth Circuit.

The case concerns allegedly false statements made by Dura to its shareholders concerning development and marketing of two of its products: an asthma inhaler and asthma antibiotic. Plaintiffs charge that the company knowingly defrauded investors by making overly optimistic statements about product approval and company earnings.

The district court held that plaintiffs had not satisfied the requirements for bringing an antifraud case under section 10(b) of the Securities Exchange Act of 1934. The court of appeals stated that the district court erred in applying the federal law for pleading a securities fraud case and reversed and remanded the judgment of the district court. The United States Supreme Court heard oral argument on January 12, 2005.