a. What was the holding in Basic?
b. What was the rationale for the holding in Basic?
c. What was the basis of Haliburton's argument in this case?
The events of this case occurred in the following order: (1) Halliburton Co. made a series of statements about its potential liabilities and expected revenue; (2) the Erica P. John Fund, Inc. (EPJ) purchased Halliburton stock on the open market; (3) the company corrected its prior disclosures; (4) its stock price fell, causing EPJ to lose money; and (5) EPJ filed suit against Halliburton, alleging that the company's initial statements had violated §10(b) and Rule 10b-5.
Halliburton asked the court to overrule Basic v. Levinson and require EPJ to prove that it bought the stock in reliance on Halliburton's misstatements. Both the trial court and the appeals court denied Halliburton's request. The Supreme Court granted certiorari.