Investors brought a class action lawsuit against man- agers of a corporation, claiming that the managers made misleading statements that caused them to over- pay for the corporation's stocks. An expert concluded that the fraud-on-the-market doctrine was applicable to "establish reliance and causation." The defendants argued that a class of action could not be certified unless the district court determined that the contested statements actually "caused material changes in the stock prices." The judge of the district court deter- mined a class certification. The defendants appealed. The appellate court held that the corporation met the fraud-on-the-market requirements. When can a statement regarding the securities market be considered fraudulent or misleading? What conditions must be met to qualify as a "material change in the stock prices"?
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