Securities Fraud Damages

A private right of action is not expressly mentioned in either §10(b) or Rule 10b-5 of the Securities Exchange Act of 1934, and hence such a right must be implied. To justify a reasonable cause of action, the plaintiff must prove: (1) a material omission or misstatement; (2) made by the defendant with “scienter” (defined later); (3) which was the actual and proximate cause of injury to the plaintiff; (4) and was relied upon by the plaintiff.³ To reach the issue of damages, defendants’ liability in terms of satisfying the above four elements must be assumed.